Types of Auto Insurance in Illinois

Ed Snaneh, Illinois Auto Insurance  Agent, Chicago


Auto insurance policy is a legal contract between an insurance company and a person (individual, partnership, or a corporation), for a specific period of time, according to which the insurance company will pay for certain damages that the person causes by accident, subject to legal rules and other a number of terms, conditions and exclusion. The definition sets the ground for the breakdown of auto insurance classification. The following is a brief description of common types of Illinois auto insurance policies.

1. Personal Vs Business Auto Insurance. This is determined by the type of persons holding the insurance. If auto insurance is provided for the personal use of an individual then the auto insurance policy is classified as 'personal auto insurance.' However if the policy is sold for any person for business or commercial uses, or if the policy is provided for a corporation or partnership then the auto insurance must be based on business auto insurance, even if the use is personal (i.e., a corporation owns an auto that is offered for the personal use of its staff, in this case a business policy is needed to protect the corporation from lawsuits (corporations cannot be protected with personal coverage!)

2. Terms of Auto Insurance Policies. Auto insurance can be written for any specified period of time. The most common terms are semiannual (every 6 months) and annual. Most personal auto insurance policies are issued with 6 months terms, while the vast majority of commercial policies are issued with annual terms.

3. Pay for certain damages. Damages that the insured person may cause by negligent or accident includes the following:
a. Bodily injury damages caused to others.
b. Property damages caused to others.
c. Bodily injury caused to self/ family members in an auto related accident.
d. Property damage caused to own vehicle.

Auto insurance policies in Illinois covering the above include:
  • Auto liability insurance which takes care of the first two parts. In Illinois auto insurance is mandatory, and every registered motor vehicle must maintain an auto liability insurance coverage.
  • Auto Medical Payment Coverage will provide coverage for c above. This is an optional coverage in Illinois.
  • Auto Physical Damage covers the Collision and Comprehensive of own vehicle after a deductible. While this is a legally optional coverage and is not required by law, people who owe money to banks/ finance companies on vehicles are expected to provide proof of physical damage coverage on borrowed-against vehicles.
4. Legal Requirements, other terms and conditions.

Auto insurance policies in Illinois are subject to certain minimum requirements outlined by Illinois Insurance Codes. The most prominent requirement is the minimum state limits on liability insurance, which is $20,000 of bodily injury per person, $40,000 of bodily injury per accident, and $15,000 of property damage per accident. These are the minimum limits that any auto policy in Illinois can be issued with, offering protection for the insured people in the event they get sued for negligent accidents. Of course, there are several other provisions, terms, conditions, and exclusion attached to Illinois auto insurance policies.

5. High Limit Liability Auto Insurance Vs Low Limit Liability. Policies that are sold at State Minimum Limits are called 'Low Limit Liability Insurance.' Many marketers call them 'Low Cost Auto Insurance' and 'Cheap Auto Insurance.' Companies that limit their offerings to State limits do provide no credit check auto insurance, and are mostly classified as 'non standard insurance companies, or substandard insurance companies.' High Limits Auto Insurance provides higher liability limits, typically $100,000/300,000/50,000 or higher, and is offered through standard and preferred carriers that, most likely, will check on applicant credit to determine the rate.
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