Automotive Spark

There are many people who are not aware of the concept of insurance. If you are one among them, this article will help you in understanding the concept of insurance, its requirements and the benefits.

An insurance policy is a contract in which there are two parties; the insured and the insurer. The insurer is the company which agrees to take up the policy of the insurer’s asset, in repayment of the premium amount. The terms of the policy is given by the insurer to the general public. The latter party can take it up if he agrees to the terms and conditions laid down by the company.

In case the insured asset of the policy holder gets damaged due to the causes mentioned in the policy, the company is liable to pay for such loses. However, the policy holder has to make the claim from the company which is granted after thorough scrutiny is done regarding the damage or loss.

One such type of insurance is the car insurance. The policy is similar to that of any other policy. In general, the amount of policy does not exceed the total value of the asset which is being insured. Car insurance requires you to have a clean driving record without which, no company will be ready to grant the policy. However, certain companies agree to grant the policy at a high rate of premium and lower policy amount.

In case there is an accident, the company will pay for the repairs of damage caused by minor accidents. However, if the accident has caused complete damage to the car, the policy amount will be given to you. In the first case, you cannot claim the entire policy amount. You should claim only the amount which is required for the repairs.

Illinois Law requires all motor vehicle owners to have minimum amounts of auto liability insurance. In addition, lending institutions may require physical damage insurance to protect their interests in a financed vehicle.

In the State of Illinois the required minimum coverage for bodily injury is $20,000 per person injured in any one accident and $40,000 for all persons injured in any one accident.

The required minimum coverage for property damage is $15,000 for injury to or the destruction of property of others in any one accident.

Optional insurance may include Uninsured Motorist Coverage. The total amount of this insurance coverage must be equal to the bodily injury liability limits, unless specifically rejected in writing. The amount of Uninsured Motorist coverage may never be less than that which is legally required for Bodily Injury Liability Coverage.

Liability insurance will cover bodily injury (costs stemming from injury or death to pedestrians or to occupants in another vehicle) or property damage (costs stemming from damage to another person’s vehicle or property, i.e., fences, trees and buildings) caused by the policy holder’s negligent operation of the vehicle. Additionally, this coverage may also be used if a member of the policy holder’s family or another person with permission to use the vehicle caused an accident. Legal defense in lawsuits may also be covered under this insurance.

Illinois requires liability limits of 20/40/15 which represent $20,000 for bodily injury coverage per person and $40,000 for bodily injury cover per accident which will pay for medical bills and lost wages. The last number of 15 represents $15,000 for property damage coverage per accident which will pay for repairs and/or replacement of objects damaged or destroyed other than the policy holder’s own vehicle.

Personal Injury Protection (PIP) and No-Fault Coverage are not required by the state, however, Uninsured (UM) as well as Underinsured Motorist Coverage (UIM) is mandatory. The UM coverage will pay expenses for bodily injuries caused by a hit-and-fun driver or a driver without auto liability insurance who is at fault. The monetary limits here are $20,000 per person and $40,000 per accident. UIM coverage will pay the difference between the policy holder’s UIM limits and the liability limits of the driver causing the accident if those limits are lower than UIM. This is required only if the policy holder purchases higher limits of UM coverage.

Collision Coverage as well as Comprehensive Coverage may also be required with regard to actual physical damage.