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how car insurance works

what covers what?

Like a healthy body, a healthy car insurance policy consists of a number of moving parts working in harmony. We'll examine a car accident scenario to explain how the individual parts of a policy, from coverages to deductibles to limits, work together to settle a claim and protect your finances.

The car insurance claim

Car accidents happen — that's what insurance is for. To give you an idea of how your coverage operates when you need it most, let's say you give your insurer the following info when filing a claim.

car accident

"A deer jumped in front of me during a yellow light. I swerved to avoid hitting him, but I ended up hitting the blue sedan in the opposite lane. Then I slid into the median, where my car struck a lamppost.

Once the dust settled, I checked on everyone: The family in the car — a man, woman, and their 2 kids — seemed OK but I couldn't be sure. They decided to play it safe and headed to the hospital. For my part, my neck was throbbing something fierce."

How car insurance steps in

Once you've filed your claim, your car insurance coverages and policy selections kick in. Let's take a look at how a sample policy could work.

person

The family in the blue sedan:

  • Your bodily injury (BI) liability coverage or the other driver's personal injury protection (PIP) coverage

Since you (and not the deer, unfortunately) were found at-fault in the accident's police report, you may be held liable for third-party medical-related expenses after the crash. In most states, BI is a required coverage. Your insurer would likely pay up to the chosen per-incident limit in this case.

In no-fault states, personal injury protection could cover the other driver's medical care up to a certain limit that varies by state.

plus

Your pain in the neck:

  • Medical payments coverage or PIP coverage

Medical payments coverage can work in conjunction with or in place of your health insurance to help cover the costs of your post-accident medical care.

In no-fault states, your personal injury protection could kick in to cover your post-accident medical expenses. And in Pennsylvania, your pain in the neck could be covered by first-party benefits coverage.

The lamppost:

  • Property damage (PD) liability coverage

As the other half of the liability coverage package, property damage helps cover repairs to other cars and property up to your policy's limit when you're at fault.

car

Your own car:

  • Collision coverage

While liability coverage aids others, collision can help pay to repair your own car in a scenario like this one. It'll pay for the cost of repairs, minus your deductible, up to the actual cash value of your car.

Getting your car to the shop:

  • Emergency road service (ERS)

When you have this optional coverage on your policy, all you need to do is call the number on the back of your ERS card. We can help you get a tow to a nearby repair shop.

What you drive while your car's in the shop:

  • Rental car coverage

Adding rental car coverage or CarMatch Rental Coverage™ to your policy can help you pay for a rental car while your car's in the shop.

Your insurance through the post-accident process

This should give you a general idea of how coverages can help pay for certain aspects of the post-accident process. If you're an Esurance customer in a real-life accident, a dedicated claims rep will sort out which coverages apply and walk you through the entire process from initial report to final settlement.

It's always worth clarifying that the above scenario is just an example, and your specific circumstances (the crash, fault, your policy's coverages, etc.) can affect how your car insurance works after an accident. Policies, like customers, are unique.

To get more in-depth detail about all of your coverage options, including your limits and deductibles, visit our Coverage Counselor® or browse through our coverage pages.

Related links

Deductibles
Get a clear understanding of what you'll pay out of pocket before certain coverages kick in.

The right amount of coverage
We offer tips on determining the coverages you select and the limits you choose when you buy a policy.

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