This coverage pays for damage you (or someone driving the car with your permission) may cause to someone else's property. Usually, this means damage to someone else's car, but it also includes damage to lamp posts, telephone poles, fences, buildings, or other structures your car hit.
This coverage pays for damage to your car resulting from a collision with another car, object, or as a result of flipping over. It also covers damage caused by potholes. Collision coverage is generally sold with a deductible of $250 to $1,000 — the higher your deductible, the lower your premium. Even if you are at fault for the accident, your collision coverage will reimburse you for the costs of repairing your car, minus the deductible. If you're not at fault, your insurance company may try to recover the amount they paid you from the other driver's insurance company. If they are successful, you'll also be reimbursed for the deductible.
If you don't have auto insurance, you have two choices: you can buy coverage at the car rental counter, or you can purchase a non-owner auto liability insurance policy.
This provides coverage for the theft of personal items in your car. However, if you have homeowners or renters' insurance, you may be covered for items stolen from the car, minus your deductible. You need to have receipts or other proof of ownership. This type of insurance usually costs about $1 to $4 per day.
This provides excess liability coverage of up to $1 million for the time you rent a car. Rental companies are required by law to provide the minimum level of liability insurance required by your state. Generally, this does not offer enough protection in a serious accident. If you have adequate liability coverage on your car or an umbrella policy on your home/automobile, you may consider forgoing this additional insurance. It generally costs about $9 to $14 a day. If you don't own a car, and rent cars often, consider purchasing a non-owner liability policy. Frequent car renters sometimes find this more cost-effective than constantly paying for the extra liability coverage.
This coverage applies to injuries that you, the designated driver or policyholder, cause to someone else. Both you and any family members listed on the policy are also covered when driving someone else's car with their permission.
It's very important to have enough liability insurance, because if you are involved in a serious accident, you may be sued for a large sum of money. Definitely consider buying more than the state-required minimum to protect assets such as your home and savings.
This coverage pays for the treatment of injuries to the driver and passengers of the policyholder's car. At its broadest, personal injury protection, or PIP, can cover medical payments, lost wages, and the cost of replacing services normally performed by someone injured in an auto accident. It may also cover funeral costs.
Environmental concerns, traffic congestion, convenience, desire to relieve driver stress, poor public transportation, lack or expense of parking are all factors that contribute to commuters forming driver groups or carpools. Parents use such arrangements to transport children to school, sports events, and extracurricular activities. It is also common for a student owning a car to carry classmates back and forth between home and school.
Regardless of the name, driver groups, share-the-ride arrangements, or carpools are a permanent part of the American scene. Typically, several drivers take turns assuming the responsibility for driving their companions. It's common for the turns to last a week and may be switched on a rotating basis. These people frequently live in the same area and work in the same office or plant. They may take turns driving or may regularly ride in one car and pay the owner a reasonable fee for gasoline, maintenance, and wear and tear.
The practice of a parent taking a group of children on an outing, to a “Little League” baseball game and the like, is commonplace. Other examples of group driving exposures are plentiful:
Drivers involved in car pools and other group arrangements may wonder if the situation is covered under their auto policy. This concern is valid as many auto policies have restrictions. Typically, liability coverage under personal automobile policies does not apply to “liability arising out of the ownership or operation of a vehicle while it is being used as a public or livery conveyance.” (A public conveyance is a vehicle used indiscriminately in transporting the public without being limited to certain persons or occasions. A livery vehicle is one that is offered for rental.) There is slight variation in language among policies issued by various insurers, but the intent is the same: to exclude the use of a personal automobile for transporting people or property for income. However, this exclusion does not affect coverage for car pool, driver group, or share-the-ride arrangements.
You have already learned that many drivers use different ride-sharing arrangements. The typical automobile insurance policy covers these arrangements because the driving exposure is essentially the same. The common policy exclusion that refers to “public or livery conveyances” is to prevent coverage for business situations. Using a car or SUV that is insured by a personal auto policy to transport people or goods for hire is unfair to insurers. The premium a company charges for personal use is inadequate to cover “public or livery conveyances” that are typically: