Car Insurance Coverage 101

Car Insurance Coverage 101

coverage options for your policy

Generally speaking, auto coverages break down into 3 distinct categories: liability, vehicle-based, and medical. While some are required and some are optional, all are extremely valuable protections that can help financially safeguard you. Here are the main types of auto insurance coverage you can choose.

Medical coverages for drivers

Medical coverages are designed to pay for the medical care of you and your passengers after an accident.

Medical payments coverage

Medical payments coverage, also known as medical and funeral services payments, can help cover accident-related medical expenses (including funeral expenses) for you, other drivers on your policy, and passengers. It can also offer coverage if you're struck by a car as a pedestrian or cyclist.

Coverages that protect your vehicle

When your car stops running, so does your daily routine. That's why Esurance offers a slew of vehicle-based coverage options designed to help get your car or truck back on the road after an accident.

Comprehensive coverage

This coverage is for all those unpredictable elements that spring up on the road or in your driveway. Comprehensive coverage, also known as "comp" or "other than collision," can help pay for repairs (or replacement, if your car's totaled) after your car's damaged by a natural disaster, vandalism, theft, fire, or a falling tree branch.

Glass damage is typically covered under comprehensive coverage too.

Collision coverage

Collision coverage, together with comprehensive coverage, is a key component of what's often referred to as "full coverage." While your property damage coverage helps others repair their cars, collision is there to assist you. If you've caused an accident, collision helps to either repair damage or replace damaged parts of your car.

Comprehensive and collision coverages are not state-mandated coverages, but they may be required by a loan or leasing company.


Emergency roadside service (ERS) coverage

While no one can doubt the importance of collision and comprehensive coverages, none of them spring into action until the car gets to a repair shop. In the meantime, there's still the matter of towing and other roadside service fees, which can rack up in a hurry. This is where emergency roadside service comes in.

ERS (called towing and labor coverage in some states) can be purchased on policies that have comprehensive and collision coverages. It can be a big lift to those marooned by mechanical failure or in need of maintenance like tire changes, gas fill-ups, battery jumps, etc.


Rental car coverage

This coverage reimburses you for the cost of your rental car if your insured vehicle is in the shop or is unavailable due to an accident. You need to have comprehensive and collision on your policy in order to add rental car coverage. In certain states, Esurance offers CarMatch Rental Coverage® which provides you the full rental cost of a vehicle comparable to yours.


Loan/lease gap coverage

We all know that a car's value depreciates over time. But if you financed or leased a vehicle and have an accident that's declared a total loss, you might end up owing more to your financing or leasing company than the car is worth.

This is where loan/lease gap insurance can be a real saver.

Insurers don't determine your actual cash value (ACV) settlement based on what you owe, but rather on what the car is worth just prior to the accident. Let's say you owe $20,000 on your new Mini Cooper, but your car is now only worth about $16,000. If your car is totaled, you might get a settlement check of $16,000 but still owe an additional $4,000 on your loan or lease.

Loan/lease gap insurance (as its name suggests) helps bridge this divide between the ACV and what you still owe.

Liability coverages

Liability is a type of car insurance coverage that's legally required in most states. It pays for damaged property, medical care, and lost wages for other drivers and passengers if you're found at fault in an accident.

As liability coverage is required in nearly all states, so, too, are the coverage limits that come with it. Each state sets its own minimum limits (minimum maximums) that drivers must maintain on their car insurance policies. These minimums are typically expressed in a 3-tier system: 25/50/15, for example. These numbers mean the following:

  • 25 – The maximum amount (in thousands) the insurer will contribute toward injury-related expenses per person
  • 50 – The total amount the insurer will contribute toward injury-related expenses per incident
  • 15 – The max amount the insurer will pay for property damage for each incident


Bodily injury (BI) and property damage (PD) liability coverage

BI and PD liability are the basic building blocks of a typical car insurance policy. Bodily injury insurance covers medical expenses and lost wages for injured drivers or passengers, while property damage insurance covers the repairs or replacement of damaged cars and other property (e.g., a garage, fence, porch, etc.).

Liability insurance can also help defray legal fees if you're sued for further damages.

Uninsured/underinsured motorist liability


There are 2 types of uninsured and underinsured motorist liability coverage: bodily injury and property damage. Both are designed to protect you, financially, from drivers with minimal or no coverage. Some states require drivers to have some form of this coverage. In other states, it's an option.

Uninsured motorist bodily injury liability coverage can help pay for medical expenses and lost wages of policyholders, authorized drivers, and passengers when the accident-causing driver is uninsured.

Underinsured coverage works similarly to uninsured insurance, except this coverage steps in when the at-fault driver's liability limits aren't enough to cover your post-accident expenses.

Uninsured/underinsured motorist property damage coverage helps pay for your car's repairs if the at-fault driver doesn't have enough of the required property damage coverage or if they are uninsured.

Verizon's "HUM" is a teen parent's fantasy, but a teenagers worst nightmare

Verizon's "HUM" is a teen parent's fantasy, but a teenagers worst nightmare

Hum, the aftermarket connected car add-on from Verizon, is about to get a little less friendly to the younger drivers in the household. An update rolling out later this month will enable geofencing and speed alert features, which are exactly what they sound like: a car's owner will be able to get notified on their phone when the vehicle leaves a pre-determined area or drives faster than a set speed.
Basically, you can't street race or head to the mall when you say you're going to do homework, because Mom and Dad will know.
Hum, which costs $14.99 per month, includes a module that plugs into a car's OBD port and a handsfree unit that can clip to a visor. Between the two — plus a smartphone app — the service offers vehicle health monitoring, roadside and emergency assistance, and stolen vehicle tracking. In addition to the location and speed alerts, this month's update will enable location tracking (a small expansion of stolen vehicle tracking) and a driving log, which measures travel times, engine idle times, and average speeds.
The product competes in a growing market for add-on connected car systems, including competitors like Automatic and Vinli, both of which use the OBD port like Hum does. All are banking on slightly different business models and degrees of functionality, though: Automatic relies on your phone's cellular connection and has no monthly fee, while Hum has no upfront equipment charge. Vinli, meanwhile, runs $199.99 upfront plus a variable monthly fee — but offers an LTE connection and in-car Wi-Fi hotspot, which Hum does not.

why car insurance rates are increasing

why car insurance rates are increasing

At some point in your driving career, your car insurance rate might go up — whether your insurer finds more info on your driving history or after an at-fault car accident. Nobody likes paying more, so we'll explain some reasons why rates could increase after you get a quote, after you buy your policy, or when your policy renews.


Here are some common reasons your insurance rates could change. . . 


car insurance quotes versus car insurance rates

A car insurance quote is an insurer's best estimate of your final premium, and it's based largely on the information you provide. The 2 main causes of a rate increase between quote and purchase are missing and newly discovered information (like unreported accidents or moving violations).

When it's time to determine your actual car insurance rate (after giving you a quote), insurance companies typically access your MVR (Motor Vehicle Report) and CLUE (Comprehensive Loss Underwriting Exchange) reports, among other things. These reports contain info on your driving history and your claims history. If the info in these reports differs from what you provided when you got your quote, it could lead to a premium adjustment.

Why actual rates can be higher than quotes

Understandably, this is a frustrating experience. There are 2 main factors behind any sudden price jump: mismatching info and omitted data.

Mismatching info

Your insurer verifies the information you provided when you got your quote. If any discrepancies turn up, like an at-fault accident that wasn't reported or a recent speeding ticket, your rate could be affected.

Omitted data

If you leave your social security number off your quote (which you can absolutely do with Esurance), your final, verified premium could be different from the quoted price. This is more prevalent in states where insurers access credit-based insurance scores as part of the rating process. Omitting things like DUIs or speeding tickets can also drive a rate increase after the incidents are discovered.

Other costs

Certain state-specific fees and installment fees (if you choose to pay monthly) may increase your final premium. To avoid an installment fee, you can choose to pay for your policy in full.

Why your premium could rise after you buy your policy

Don't worry, we'd give you plenty of warning before this happens.

Generally, your rate could increase in the first month or 2 after you buy your policy if you don't submit any required forms or we find an undisclosed accident or incident on your MVR.

In some cases, you might be asked to submit proof of prior insurance to certify that you've had continuous coverage for as long as you indicated. (We'll remind you to submit any necessary forms after you buy your policy.)

In other cases, your state may require you to submit proof of health insurance in order to maintain lower medical coverage limits. If we don't receive this form, we may need to adjust your coverages.

It's our policy to contact you at least 3 times before we take any action on your rate. And you can still submit forms after a rate increase to get your premium restored to its original level.

why your premium could increase at renewal

Several factors can lead to a higher premium in your next policy term.


You filed an accident claim that warrants a re-rate, meaning your rate is recalculated based on the recent claim.


You were convicted of a moving violation, which may cause your rate to be recalculated.

Lapsed discounts

One of the discounts you qualified for no longer applies. If you qualified for the Switch & Save® discount when you bought your policy, for instance, the discount will lapse on your third term because it's a 2-term discount. Or if you were recently found at-fault in an accident, you could lose your Claim-Free discount. 

New ZIP Code

Where you live influences your rate, so if you move to an area with a higher theft or accident risk, your renewal premium could reflect this change.

State rate plans

Your insurer and your state's department of insurance have agreed on a new rate plan for all drivers in the state.



You should always be aware of your insurance plan and be price conscience. Make sure you get insured with an agency that carries multiple carriers to help you manage rate increases and price jumps, otherwise, it will be a tough go around dealing with rates on your own.