Coverages in an Auto Policy
Liability coverage, the only coverage most people are required to carry under Alaska law, provides protection from claims by others for damages that might arise out of an accident for which you are found to be legally responsible. The owner or operator of a vehicle registered for use on the road must have liability coverage with minimum limits of $50,000 per person for Bodily Injury, $100,000 per accident for Bodily Injury, and $25,000 per accident for Property Damage. Bodily Injury is the portion of your Liability coverage that pays for expenses such as medical costs, loss of income, and funeral costs of others who are injured or killed as the result of your negligence. Property Damage is the portion of your Liability coverage that pays for expenses to repair or replace the property of others which is damaged as the result of your negligence.
Alaska Statute 28.22.019 requires that you must have a copy of your policy, certificate of self-insurance, or identification card in your immediate possession when you are driving a motor vehicle. Additionally, if you are involved in an accident that results in bodily injury, death, or property damage exceeding $501, you will be required to show proof of insurance. Failure to have insurance can result in the suspension of your driver’s license. Before your license can be reinstated, proof of financial responsibility must be supplied and reinstatement fees must be paid. An SR-22 filing, which provides proof of financial responsibility, may be obtained from your insurance company and must be filed with the Division of Motor Vehicles for three years following an accident in which the driver was uninsured.
Physical Damage Coverage
Physical Damage coverage is not required by Alaska law, but may be required by your lender if your vehicle is financed. Physical Damage coverage provides a method of taking care of damage to your vehicle and is commonly divided into Collision and Comprehensive coverages. Collision coverage pays for the replacement of your vehicle or the repair of damage to your vehicle that is caused by colliding with an object or by overturning. Comprehensive coverage, sometimes called “other than collision” coverage, pays for theft of your vehicle and types of physical damage not included in your collision coverage, such as broken glass, fire, collision with a bird or an animal, or vandalism.
You will be required to pay a deductible when you file a claim for physical damage coverage. A deductible is the portion of a loss that you agree to retain in the event that you have a covered loss. In the event of a covered loss, the insurance company will pay for any covered loss less the deductible. If you have a $250 deductible and suffer a $1,000 covered loss, the company will pay $750 and you will be responsible for the remaining $250.
Uninsured/Underinsured Motorists Coverage (UM/ UIM)
Uninsured/Underinsured Motorists Coverage, like Liability coverage, is divided into Bodily Injury and Property Damage sections. This coverage is designed to take care of your injuries and damage to your property. If you are in an accident and the other party is found to be responsible, but does not have insurance or does not have enough insurance to meet your expenses, this coverage is available to meet your needs. This coverage also applies to hit-and-run situations or when your vehicle is hit while parked and you are unable to determine the identity of the other party.
When you complete an application for auto insurance, you must be presented with a written offer for this coverage. Insurers must offer you a variety of coverage choices, including limits equal to the Liability coverage which you selected, as well as several optional limits up to $1 million per person/$2 million per accident for Bodily Injury. You must be offered Bodily Injury and Property Damage as separate coverages. You have the option of selecting both Bodily Injury and Property Damage at any of the available limits, rejecting both Bodily Injury and Property Damage, or selecting one coverage and rejecting the other. If your selection or rejection is not verified by your signature, Alaska law requires that the company issue your policy with coverage at limits matching your Liability coverage. If you reject this coverage, the company is not required to make another offer at renewal, but you may request that the coverage be added at any time.
Medical Payments is an optional coverage that pays hospital, medical, and funeral expenses for you or others who are injured or killed while in your vehicle. Coverage also applies to you, your family members, or others insured on your policy when they are in another vehicle or when they are injured by a vehicle as a pedestrian. Unlike Bodily Injury Liability coverage, payment under this coverage can be made without a determination of negligence.
Rental Reimbursement Coverage
Rental Reimbursement coverage repays you for the cost of a rental car only when your vehicle is disabled after a covered loss. Reimbursement may be limited to a specific amount per day and for a limited number of days.
Towing and Labor Coverages
Towing and Labor Coverage, sometimes called Roadside Assistance or Emergency Services, pay for the cost of towing your vehicle to a repair shop. One way that towing costs are often covered is by providing up to a specific amount per use, but there may not be a limit indicated on the number of times this coverage may be used. This coverage may also provide payment or reimbursement for other types of assistance provided by a mobile service unit. Examples of the types of services that may be covered are locksmith, delivery of a part such as a fan belt, the cost to change a tire or jump start your vehicle.
If you have added audio equipment to your vehicle, you may want to check with your agent or insurance company to see if you need this additional coverage. Most policies will only cover the theft of an audio system that was installed in your vehicle by the factory or that is permanently installed in the dashboard. Theft of CDs or cassettes may be included in this coverage or added as a separate coverage.