A quick guide to your auto insurance coverages and how they work

If you’ve been in an auto collision, there are four basic coverages that might come into play, depending on the policy you have purchased:

  • Liability;
  • Uninsured/Underinsured Motorist Coverage;
  • Collision;
  • Medical Payments coverage


Liability coverage, whether it’s for property damage or bodily injuries, applies when you are responsible for causing a collision and someone else who was involved in the collision brings a claim against you. If a liability claim is made against you, your insurance company will investigate, and possibly defend against, the claim, but may be obliged to pay an amount up to the limits of your liability coverage to dispose of the claim.

Every auto insurance policy that is written in Virginia is required to afford at least $25,000 in liability coverage, so you must purchase at least that much. But if a claim against you turns out to be worth more than your liability limits, this could jeopardize any personal assets you might own, so it might make sense to buy a bit more liability coverage if you are able.

Uninsured/Underinsured Motorist Insurance

Uninsured/underinsured motorist coverage, what we call UM/UIM coverage, is coverage you buy for yourself to provide another potential source of insurance coverage if it is needed. This coverage can come into play if you are injured in a collision caused by an unknown driver, or by a driver who either has no insurance, or less insurance than you.

How does it work? Well, let’s say that on your policy you have $50,000 of UM/UIM coverage and you are injured in a collision caused by a driver who has $25,000 in liability coverage. If you claim turned out to be worth more than $25,000  (let’s say $30,000), the first $25,000 would come from the other driver’s insurance and the next $5,000 would come from your policy under your UM/UIM coverage.

Collision Coverage

Collision coverage is a coverage you buy for yourself to pay for damage to your car. You may have to pay a deductible, but if the collision was not your fault, your insurance company may be able to get this money back for you. For more information, see my other report, “But He Hit Me! Why should I use my insurance to pay for anything?

Medical Payments Coverage

Medical Payments coverage, or MedPay, is coverage you buy for yourself to help you weather expenses you incur for medical evaluation and treatment you may need after an auto collision. This is an optional coverage, so you have to specifically request it from your auto insurance company. The amount of MedPay coverage available to you for any given claim is equal to the limit of coverage you have purchased, let’s say $2,000, multiplied by the number of cars on your policy for which you purchased this coverage. In other words, if you have two cars insured under your policy and have purchased $2,000 in MedPay coverage, then you have $4,000 (2 x $2,000) in MedPay coverage available to you to use toward medical expenses incurred as a result of a single collision.

How does it work? In Virginia, MedPay coverage is obliged to reimburse you for the “actual expense incurred,” which really means anything you and/or your health insurance actually pay or are obliged to pay for any medical evaluation or treatment. For example, let’s say you go to the doctor and the doctor charges you $100 for the visit. If you have health insurance, you might have to pay a co-pay of, say, $20. Your health insurance will likely then “adjust” the charge and pay some portion of it, let’s say $50. So the total “actual expense incurred” is $70, your $20 co-pay + the $50 your health insurance paid. That is the amount that MedPay reimburses. If you don’t have health insurance, or the evaluation and treatment is not covered by health insurance, the MedPay will reimburse the total amount charged, or in this example, $100. For more information, see my other report, “But He Hit Me! Why should I use my insurance to pay for anything?