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What Does Car Insurance Cover and Not Cover?

Buying auto insurance can be intimidating. What coverage is best for you? And what exactly will it cover? These are questions to discuss with your insurance agent before purchasing. No one wants to be in an accident, but when they happen, car insurance is what saves the day and helps covers the costs.

With so many companies offering car insurance and all the options available, it can often get confusing. We're giving you some basic tips and examples of what car insurance covers and does not cover.

Do you have to have car insurance in Tennessee?

Yes. In Tennessee, you are required by law to have liability insurance to cover injuries or damages you may cause, and there are minimum limits:

  • $25,000 for each injury or death per accident.

  • $50,000 for total injuries or deaths per accident.

  • $15,000 for property damage per accident.

It's up to the individual if they want to extend coverage beyond just liability. If you are caught driving without insurance, the penalties can be a fine, suspended license, or a STOP on your car, which keeps you from renewing your registration. If you have had trouble purchasing car insurance because your are classified as a risky driver or have a poor driving record, there is an option through the state of Tennessee called TAIP (Tennessee Automobile Insurance Plan) that drivers can look into.

What other insurance options are available?

In addition to basic liability coverage, you can purchase other insurance options that will offer more coverage for things like medical bills, non-accident related damages, and a rental car. Here's a breakdown of what these options will cover:

Collision - Covers some or all of your car repair or replacement costs if you are in an accident with another vehicle an object like a tree or building. It also covers damage from accidents where no other car or object is involved, such as if you drive into a lake. Some collision policies will cover your pet if he gets injured in an accident and the coverage is minimal, but most will not.
Comprehensive - Covers damages to your car that are not accident related. This can be things like fire, weather, vandalism, or hitting a deer.
Uninsured motorists - Will help cover the costs associated with accidents with uninsured drivers.
Medical payments and personal injury protection - Helps pay for your medical bills and/or loss wages due to an accident.
Rental car - Helps you pay for the cost of a rental car while your car is being repaired.
Emergency Road Service Coverage - Helps to cover the costs when your car breaks down. It covers things like towing, tire changes, battery service, fuel delivery and locksmith service.

There are many other custom options that you can add on to your car insurance policy, and you can read about them here.

Car insurance does not cover what is inside your car.

According to the FBI, more than 2,000 motor vehicle thefts occur each day in the U.S. If your car is stolen, your insurance (depending on the policy) will cover your car. However, if your Xbox was in the back seat, insurance will not replace it. The same applies for a suitcase full of clothes, a laptop or golf clubs. Any item specific to the use of your car like a radio or CD player will be covered if stolen. If you have upgraded the stereo system or added custom rims, it's best to upgrade your auto policy to cover these extra items.

Drivers you live with aren't covered unless they are on the policy

If you loan your car to a friend who does not live with you and they get into an accident, your insurance will cover the damage. However, if your friend moves in with you then borrows your car, your insurance will not cover the damage. The rule is to prevent safe drivers from buying car insurance for unsafe drivers who live with them. To be covered, every driver who lives in your home has to be listed on the insurance policy.

Uninsured/underinsured motorist insurance

If an accident is your fault, your insurance will cover the damage according to the limits of your policy. However, what if the other driver is at fault and they don't have insurance or have minimal insurance? The Insurance Research Council estimates that between 15% and 26% of drivers in Tennessee do not have auto insurance, as of 2012.

Uninsured - If you get into an accident with someone who is not insured at all, you will be paying for all of the damage unless you have uninsured motorist coverage. This can also be called uninsured motorist bodily injury insurance and will cover both you and your passengers for things like medical bills, pain and suffering and any lost wages.

Underinsured - You'll most likely be paying for some or most of the damage if the driver has minimal insurance (underinsured). This means that the driver DOES have insurance, but not enough to cover the damage he or she has created. There's two types of coverage you can purchase to protect you against a driver who is underinsured, underinsured motorist property damage coverage and underinsured motorist bodily injury coverage, which is the most commonly purchased. Some states require this coverage as part of your policy, but not all states.

Either way, that's money out of your pocket unless you have appropriate insurance to cover both the uninsured and underinsured drivers. For just a bit more money every month, you can be protected against drivers who do not have insurance or have the bare minimum. Be sure to ask your agent about uninsured/underinsured motorist coverage - experts recommend that the policy cover as much as your liability coverage.

Driving without insurance is a risk to both you and other drivers on the road, and it is legally required in Tennessee. You never know when an accident will happen, and it's best to practice safe driving habits and have at least basic insurance with uninsured motorist to protect you and your loved ones.

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