Different Types of Car Insurance – A Guide

Before buying a car the most important thing to consider is to study and examine insurance options in order to choose the right one, tailor-made for your demands. Understanding the common types of car insurance policies that are available out there is crucial, as it provides the much needed safety for your vehicle and your passengers, while you’re on the road. There are six common car insurance types which include: auto liability coverage, comprehensive coverage, uninsured & underinsured motorist coverage, medical payments coverage, collision coverage and personal injury coverage. Some of these coverages are mandatory or optional, depending on your state requirements. Understanding the mandatory measures of your country and what each of these represent will ultimately help you safe-proof your car and your overall driving welfare.

  1. Liability Coverage

Auto liability coverage is considered mandatory in most states and is a standard component of most auto insurance policies. This type of insurance provides protection in two ways, namely if you seem to cause an accident that injures another person or if you happen to damage another person’s property with your car. Ergo, liability coverage contains two elements:

  • Bodily injury liability; helps pay for any medical expenses correlated to another person’s injury caused by you
  • Property damage liability; helps pay for the damage you might cause to another person’s vehicle
  1. Comprehensive Coverage

Comprehensive coverage is a type of insurance that can help with protection when theft, fire, vandalism or hail occur. If your vehicle suffers damage from a covered peril, comprehensive insurance might help repair or even replace entirely any defilement your vehicle might sustain. This type of coverage has a deductible, which is the out-of-pocket amount you have to pay before your insurance provider reimburses you for an insured claim. Comprehensive coverage is typically considered optional, but it might be a part of the contract with your lender, in cases you’re paying off or leasing your vehicle.

  1. Uninsured and Underinsured Motorist Coverage

If an accident occurs and you are hit by an uninsured driver, uninsured motorist coverage might help with medical costs or, in some states, any repairs that your vehicle might need. If you happen to participate in an accident with an underinsured driver, that suggests that the other driver’s car insurance has limited liability that blocks them from paying the full amount of your potential medical bills. This is a situation where underinsured motorist coverage may assist you. Uninsured and underinsured motorist coverage is mandatory in some countries and optional in others.

  1. Medical Payments Coverage

If anyone from you, your family members or your passengers who are driving the insured automobile happen to get injured in an accident, medical payments coverage is there to provide a safety net for injury associated costs. Covered medical costs may include tests, analysis, X-rays, hospital visits, surgery and more. This type of insurance is also optional in some countries while mandatory in others. 

  1. Collision Coverage

If an accident with another vehicle occurs or if you happen to hit an object such as a fence, lamppost, even a tree etc., collision coverage may assist you in repairs or replacement of your car, depending on the actual value and minus the deductible you pay to your insurer. Collision coverage is mostly optional, although it may be a demand of your vehicle’s lender or leaseholder. 

  1. Personal Injury Coverage

PIP or personal injury protection is an insurance option only available in some countries and is similar to the medical payments coverage, as it can help with paying medical expenses after an accident happens. Additionally, PIP can help with covering other expenses incurred because of the injury, for example, lost income or child care expenses. This type of insurance, as many listed above, is obligatory in some countries while optional in others. 
After listing the main types of car insurances, you can also add the following optional coverages to your car insurance policy, depending on your needs and demands. Some of these options are: gap coverage, new car replacement coverage, ride-sharing coverage, towing and labor coverage, classic car insurance, rental reimbursement coverage, sound system coverage etc. Choosing the right options for your car insurance policy might be difficult, so be sure to study the materials well, rethink your requirements and don’t hesitate to contact an insurance agent from your insurance company, who might assist with putting together a policy that’s just the right fit for you.

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