What Your Insurance Policy Covers

Here's what your insurance policy covers, including what’s mandatory, optional, and additional stuff you’ll want to ask your insurance rep about.

Mandatory Coverage

Liability Insurance: Liability insurance provides protection if you injure or kill someone, or damage his or her property as a result of an auto accident.

The standard limit is $1 million, but there’s a $2 million option, too. You can lower your insurance rate and select $500,000. And depending on which state you live in, you could go even lower.

Your Policy Automatically Covers: Accident Benefits, Uninsured Automobile and Direct Compensation Property Damage are automatically covered. These, and liability, are the only coverages required by law.

Accident Benefits: This covers those injured as a result of a motor vehicle accident. It provides income replacement, and caregiver benefits if you normally look after another person and cannot continue to do so. It includes medical expenses, rehabilitation, and pays someone to look after you if needed. It covers a death benefit for which your spouse or children would receive a payout, usually around $25,000, depending on the province or state. And there’s a limit included for funeral expenses. You can accept the standard limits for this coverage or you can purchase increased limits.

Uninsured Automobile: Your policy provides coverage for bodily injury or death if an uninsured or unidentified automobile hits you. It also covers damage to your car, car rental coverage, and contents coverage if you are hit by an identified, uninsured automobile.

Direct Compensation Property Damage: This covers the cost to repair your car after an accident if you were not at-fault. There is usually no deductible, although you can select a deductible to reduce your rate. If you were partially at fault, you may be covered by both your collision and your direct compensation property damage coverage.