Feb 18, 2021 4 min read

Depending on whether you own a vehicle with a lien or lease your car, there are two coverages that are optional under Pennsylvania law and will be required by your lien-holder or leasing company.

Comprehensive, referred to as “comp” or coverage D, covers physical damage to your vehicle not caused by collision. Collision, or coverage G, provides coverage if your vehicle is damaged by hitting an object or another vehicle.

If you own a vehicle with no lien or lease, you can choose to not carry these coverages. Deciding whether to carry comp and collision on your vehicle when not required is usually based by determining the value of the vehicle.

In our office, we advise customers to stop carrying collision coverage when the vehicle value falls below $2,000. You can find your vehicle’s value online at sites like Kelley Blue Book or NADA. Because of the low cost and the coverage provided for glass breakage, my office always suggests keeping comprehensive coverage until a vehicle has no value.

So if you need to carry comp and collision, or if you want to carry comp and collision, your only real choice is the amount of your deductible. A deductible is the amount of money you are required to pay first before your insurance company pays any money.

Deductibles apply only to comprehensive and collision coverage and can be as low as zero deductible, where you pay nothing to as high as your insurance company will allow. The higher your deductible, the lower your premium. Beware that your lien-holder or leasing company may have limits on how high a deductible you may carry.

Saving money by carrying high deductibles is a good risk-management tool. It requires that you understand how much you will need to pay if you wreck your car while, at the same time, it gives you a reason to improve your driving habits.

The next optional coverage in Pennsylvania is loss of income, or coverage Z. It can be purchased in amounts of $1,000 per month up to $2,500 per month, with total payout limits of $50,000.

If you are not receiving earned income, then make sure your policy does not have this coverage. Knowing that most people do not have enough disability coverage, we advise our customers to consider carrying the highest limit for Z.

The most misunderstood optional coverages are underinsured (W coverage) and uninsured (U coverage). The closeness in spelling confuses some people. Underinsured motor vehicle coverage protects you in the event a person injures you and he or she carries minimum liability coverage. Uninsured motor vehicle coverage protects you in the event a person injures you and has no liability coverage.

In both cases, you can recover financially from your own insurance company for bodily injury caused by a third party. The coverage is sold with the same limits as liability coverage, beginning with $1,500/$30,000 and increasing in amounts to match your liability coverage.

To add to the confusion with this coverage, Pennsylvania law enables you to buy stacking and non-stacking uninsured/underinsured motorist protection. If you have stacking coverage, you can combine the limits of all the insured vehicles you own to maximize your benefits.

What uninsured and underinsured coverage do not provide coverage for are bodily injury when no third party is involved and property damage.

The next optional coverage that we recommend to all our customers is Q, or extraordinary medical coverage. This begins after you have experienced $100,000 in medical bills and will pay an additional $1 million. We recommend it not only because it covers large medical bills, but because it covers rehabilitation and necessary medical equipment, including home remodeling for an injured person.

The last two optional coverages are rental car reimbursement (R) and towing reimbursement (H). The first allows you to replace your vehicle while it is being repaired because of an accident. Towing coverage not only includes towing, but changing of flat tires and mechanical labor at the site of the breakdown.

Vehicle insurance can be complicated. Talking with an insurance agent to determine what you need, and what you want, may make sense.

Bob Hollick is a State Farm Insurance agent based in Washington. His column appears every other Thursday in the Observer-Reporter.

To submit columns on financial planning, investing or business-related matters, email Rick Shrum at rshrum@observer-reporter.com.