What Does Auto Insurance Actually Include?

Every time you venture onto the road, you roll the dice with fate. Understanding insurance is the safety net that cushions us from the unforeseeable events. From safeguarding our health to protecting our cars, insurance stands as a bulwark against financial ruin.
Auto insurance provides crucial protection for any vehicle owner. With laws mandating minimum coverage and a spectrum of options available, navigating auto insurance basics can be as complex as driving through rush hour traffic.

We look to help you steer you through the essentials of liability insurance within the realm of auto insurance. We'll explain what liability coverage entails and how it protects your finances, providing the knowledge you need to make informed decisions about your auto insurance policy.

​Auto Insurance Basics

Auto insurance is a critical safeguard that helps protect drivers financially in the event they are responsible for an accident. Liability car insurance, the core component of any auto insurance policy, is designed to cover the expenses of other people impacted by an accident for which the policyholder is at fault. Notably, it does not extend to the policyholder's own medical expenses or vehicle repairs.
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Within the realm of liability insurance, there are two pivotal categories: Bodily injury liability coverage and property damage liability coverage. Bodily injury liability pays for costs associated with injuries that other people have sustained in an accident you're found responsible for. This often includes medical bills, lost wages, and legal expenses. In contrast, property damage liability takes care of repairing or replacing someone else’s property that you damaged in an accident, which could include another car, a home, or other physical assets.

It's important to understand that liability insurance is not just a matter of personal preference but a legal requirement. Drivers are typically obligated to carry minimum levels of liability insurance, prescribed by state laws. Failing to have this insurance could not only result in significant out-of-pocket expenses if involved in an accident but also lead to legal penalties.
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Types of Coverage

In addition to liability insurance, there are various types of coverage that can complement and enhance your insurance portfolio. Full coverage insurance typically packages liability, collision coverage, and comprehensive coverage. Collision coverage extends to your own vehicle damages resulting from an accident, while comprehensive coverage pays for damages from non-collision events like natural disasters, theft, or vandalism.
While comprehensive and collision coverages are optional and increase the overall cost of your insurance, some drivers may find the added protection worth the extra cost. For those concerned about encounters with uninsured drivers, uninsured and underinsured motorist coverage is particularly advisable and even mandatory in some states.

Liability Coverage Limits

In Oklahoma, as in most states, drivers are legally required to have a certain amount of auto insurance to cover any damage or injuries they may cause in an accident. Here are the minimum coverage requirements and liability coverage limits for auto insurance in Oklahoma:

1. Bodily Injury Liability: This coverage pays for injuries that you, as the policyholder, cause to someone else. The minimum limits required by Oklahoma law are $25,000 per person and $50,000 per accident. This means the insurance company will pay up to $25,000 for a single individual's injuries and up to $50,000 total for all injuries in a single accident, subject to the per person limit.
2. Property Damage Liability: This coverage pays for damage you, or someone driving the car with your permission, may cause to someone else's property. In Oklahoma, the minimum required limit for property damage liability is $25,000 per accident. This can cover damages to another vehicle, building, fence, or any other property damaged in an accident.

It's important to note that these are the minimum requirements, and many drivers opt for higher limits to better protect themselves financially. Liability insurance does not cover your own injuries or property damage; it only covers the damages for others for which you are legally responsible. For coverage of your own vehicle, you would need to consider Collision and Comprehensive coverages, which are not required by state law but may be required by your lender if you have a loan or lease on your vehicle.

In addition to the above, Oklahoma law does not require drivers to carry Uninsured Motorist (UM) or Underinsured Motorist (UIM) coverage, which provides protection if you're in an accident with a driver who either doesn't have insurance or doesn't have enough insurance to cover the damages. However, insurance companies are required to offer UM/UIM coverage as part of any auto insurance policy sold in the state, and you have the option to decline this coverage in writing.

Remember, carrying the minimum insurance required by law may not be sufficient to cover all costs associated with an accident. It's often recommended to assess your financial situation and consider purchasing higher limits of liability coverage and other types of coverage to ensure you're adequately protected.

Collision and Comprehensive Coverage  

​Collision coverage deals specifically with the policyholder’s car damage post-collision, whether it involves another vehicle or a static object, like a tree or guardrail. Meanwhile, comprehensive coverage caters to situations outside of collisions, including theft, fire, or environmental damage. Both coverages are optional and go above and beyond the minimum requirements of auto liability insurance but can be valuable for those looking to protect their vehicle investment more comprehensively.

Additional Coverage Options

​Auto insurance doesn't stop at just covering the car and bodily injuries. Many insurers offer additional coverage options. These might include rental reimbursement, which covers the cost of a rental car while your vehicle is repaired. Moreover, personal umbrella liability insurance provides an extra layer of protection beyond the standard coverage, safeguarding assets in the event of a serious lawsuit.

For business owners, there are specific liability coverage options, such as Cyber data breach liability insurance and Errors and Omissions insurance, that protect against specific risks associated with business operations. Landlord insurance, too, usually includes liability coverage, guarding property owners against potential legal and medical expenses arising from accidents on their property.

Additional Auto Insurance Considerations

When it comes to auto insurance, understanding the full scope of your coverage is crucial. Beyond the standard liability coverage, which includes bodily injury and property damage protection, there are several additional considerations for those seeking full financial security.

For individuals with significant assets or a higher risk profile, purchasing an umbrella policy might be a wise choice. Such policies offer extended liability coverage beyond the standard limits of an auto insurance policy, providing an additional layer of security. While a standard policy might offer substantial protection, an umbrella policy kicks in when those limits are reached, safeguarding personal assets from the potential ruin of large claims or lawsuits.
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Full coverage car insurance combines liability with comprehensive and collision coverage, offering extensive protection against various types of damages. While it is more costly, full coverage gives peace of mind by addressing a wider array of situations that could affect your vehicle, from theft to natural disasters.

Choosing the right coverage often involves balancing cost with potential risk. Adding comprehensive and collision options to a liability policy may increase premiums, but also increases protection—potentially saving money in the long run by limiting out-of-pocket expenses after an accident.

Each state sets its own regulations on the minimum liability coverage limits required to drive legally, and these limits serve as a baseline for financial protection in the event of an accident. It's crucial to at least meet these benchmarks to avoid legal complications, but increasing your limits can protect from the financial repercussions of an accident resulting in substantial damages or injuries.

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Uninsured and Underinsured Motorist Coverage

​Uninsured and underinsured motorist coverage comes into sharp focus when you're involved in an accident with a driver who either has no insurance or inadequate coverage. It's an unfortunate reality that not all drivers carry the necessary insurance, leaving you vulnerable to uncovered costs in the event of an accident.

This type of coverage steps in to cover your medical expenses and property damage, providing a crucial financial safety net. It can also fill the gap when the at-fault driver's insurance can't fully cover the cost of damages. It's a form of financial backup that aims to ensure you're not left shouldering the burden alone, emphasizing the protection of your resources.
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Personal Injury Protection and Medical Payments Coverage

Personal injury protection, or PIP, enhances your insurance coverage by paying for immediate medical expenses, lost wages, and even necessary household services for you and your passengers, irrespective of fault. This type of coverage is mandatory in some states and serves as a blanket policy for when accidents happen, making it a cornerstone of auto insurance in those areas.

Medical payments coverage, often referred to as MedPay, operates similarly to PIP by covering medical expenses incurred by you and your passengers after an accident. Unlike PIP, it does not typically extend to lost wages or services. Although not required in all states, MedPay can supplement your health insurance, or step in where health insurance might fall short, offering coverage for you regardless of who is at fault.

Umbrella policies and their benefitsUmbrella policies are a strategic addition to your auto insurance suite, especially if you have significant assets or are at a higher risk for liability claims. By offering liability coverage above and beyond the limits of your auto or homeowners policy, an umbrella policy provides extensive protection against large claims.

An essential tool in asset protection, umbrella policies can save you from financial distress in the face of damaging lawsuits exceeding your standard policy's limits. Whether it's your home, savings, or future earnings, the extra coverage safeguards against the depletion of your hard-earned assets while providing peace of mind and robust financial defense.
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Gap and Mechanical Breakdown Insurance

Gap insurance is crucial for those who owe more on their car loan or lease than the vehicle's actual cash value. In cases of total loss or theft, gap coverage pays the difference between what you owe and the depreciated value of your car, preventing financial strain from an underwater loan or lease.

Mechanical breakdown insurance (MBI) provides coverage for unexpected mechanical or electrical failures, extending beyond typical warranty repairs. It’s an attractive option for those looking to avoid out-of-pocket expenses for significant car repairs not covered by standard policies.

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Scott Godwin
Founder

Oklahoma Insurance Professionals LLC serves Oklahoma City and the surrounding Oklahoma communities by protecting the people we work with just like we protect our own family members. Home insurance, auto insurance, business insurance, and more. We can help you find the coverage you need. ​