What Does My Car Insurance Policy Cover?

Oftentimes people don’t know exactly what kind of insurance coverage they have on their vehicle. Many people think that they have full coverage but don’t have a detailed understanding of what that means. Some people think of full coverage as liability and comprehensive/collision, other people view full coverage as liability coverage only, while still others think of full coverage as liability, comprehensive/collision, and uninsured motorist, etc.

The goal of buying car insurance is to ensure that you’ll be adequately covered if you’re involved in a car accident. All too often, people are led astray by the confusing insurance jargon and end up without the coverage they want and need. The best way to get the insurance you need is to take the time to review the types of coverage you have and determine whether that coverage will make you whole in the event of an accident, regardless of who is at fault for the accident. The first step is understanding what types of coverages are available and what is required.

Under the New Mexico Financial Responsibility Act, the owner of a vehicle is responsible for obtaining liability insurance for the vehicle. Liability insurance is the basic insurance coverage that covers damages to other people and property when you are at fault for an accident. It does not cover your injuries or damage to your vehicle when you are at fault for the accident. New Mexico requires all drivers, who have personal vehicles registered in the state, to have a minimum of the following liability insurance coverage amounts:

  • $25,000 for bodily injury to or death of one person in any one accident.
  • $50,000 for bodily injury to or death of two or more people in any one accident.
  • $10,000 for property damage in one accident.

Liability insurance is the only type of insurance required to register your personal vehicle in the state, but you may not be adequately covered if you only carry liability insurance on your vehicle. Below are some other common types of car insurance coverages in New Mexico.

  • Collision Coverage. This type of coverage will cover the damage to your vehicle, and often its contents, in the event of a collision (like a car accident), regardless of who is at fault for the accident. It is often sold in combination with Comprehensive Coverage.
  • Comprehensive Coverage. This type of coverage will cover the damage to your vehicle in the event of something other than a collision, such as theft, fire, tree branch falling onto your car, hail, windstorm, etc. It’s important to read through the specific coverages on your individual policy so you will know exactly what is covered by your comprehensive coverage.
  • Uninsured Motorist. This coverage has a bodily injury and property damage portion that will cover your damages in the event that the at fault driver does not have any liability insurance coverage. Uninsured motorist is often coupled with underinsured motorist coverage, but they can be sold separately.
  • Underinsured Motorist. This coverage has a bodily injury and property damage portion that will cover your damages in the event that the at fault driver does not have enough liability insurance coverage.
  • Rental Insurance. This coverage will pay for a rental vehicle following an accident, regardless of who was at fault.
  • Medical Payments Coverage. This type of coverage provides a set amount of money to pay for medical expenses arising from a motor vehicle accident regardless of who is at fault for the accident. The amount of coverage can vary, but commonly ranges from $1,000 to $10,000. This coverage is available for you to use right away, and you don’t need to wait for the final settlement.
  • Gap Insurance. This pays the gap between what the car is worth and what you owe. Cars depreciate in value relatively quickly. If you have a loan on your vehicle, you should consider this coverage.
  • OEM Endorsements. You might not realize that most insurance policies will not pay to replace parts from the original parts manufacturer. Adding this feature will increase your coverage and ensure that Original Equipment is put into your vehicle after it is damaged.
  • Pet Injury Coverage. This type of coverage will pay for veterinary bills and medicine for your pet that is injured in a motor vehicle accident. This type of coverage is often included in your collision coverage.

This is not an exhaustive list of all of the types of available coverage, but it does review many of the common types. It is important to recognize that available coverages and costs will vary for each insurance company. Additionally, some of these coverages may require a deductible. You need to review your policy and coverages to make sure everything you need covered will be taken care of after an accident. Don’t wait until after you’ve been in an accident to find out you don’t have the coverage you expected and need.