When you purchase a new car for auto insurance, you will likely need to understand the common kinds of coverage available on a car insurance policy. The different types of car insurance coverage are available to protect you, your passengers and your vehicle if you face a car accident.
Car insurance policies options are auto liability coverage, comprehensive coverage, collision coverage, uninsured and underinsured motorist coverage, medical payments coverage and personal injury protection. Based on where you live, some of these coverages are compulsory and some are optional. Understanding what is wanted in your state and what every support cover can help you choose the right coverage for the situation.
LIABILITY COVERAGE OF AUTO INSURANCE POLICY
Auto liability coverage is compulsory in most states. Drivers are legally needed to buy at least the minimum amount of liability coverage set by state law. Liability coverage has two components.
- Bodily injury liability may support pay for costs related to another person’s injuries if you cause an accident.
- Property damage liability may support paying for damage you cause to another person’s property while driving.
Auto liability insurance is a kind of car insurance coverage that is wanted by law in most states. If you cause a car accident in other words, if you are liable for the accident liability coverage supports to pay for the other person’s expenses. Auto liability coverage comes in two forms: property damage liability coverage and bodily injury liability coverage. Drivers in most states must have two types of coverage.
UNINSURED AND UNDERINSURED AUTO INSURANCE POLICY COVERAGE
If you are hit by a driver who doesn’t have insurance, uninsured motorist coverage may support paying for your medical bills or, in some states, repairs to your vehicle. If you’re hit by an underinsured driver, that means they have car insurance but their liability limits are not enough to cover your resulting medical bills. That is where underinsured motorist coverage may support.
Uninsured and underinsured motorist coverage is wanted in some states and optional in other states. Uninsured motorist insurance coverage is part of a car insurance policy that helps pay for your medical bills or car repairs if you’re hit by a driver who doesn’t have car insurance. When you are in an accident and the other driver is found to be at fault, his or her auto liability coverage would help pay for your medical bills or repairs to your car. But if the at-fault driver does not have car insurance, you may have to pay out of your own pocket for those expenses. That’s where uninsured motorist coverage may help.
Comprehensive may support insurance to cover damage to your car from things like theft, fire, hail or vandalism. If your car is damaged by a covered peril, comprehensive coverage may help pay to repair or replace your vehicle (up to the vehicle’s actual cash value). This coverage has a deductible, which is the amount you’ll pay out of pocket before your insurer reimburses you for a covered claim.
Comprehensive is an optional coverage however your lender may require it if you’re leasing or paying off your vehicle. Comprehensive insurance is coverage that helps pay to replace or repair your vehicle if it’s stolen or damaged in an incident that’s not a collision. Comprehensive, sometimes known as “other than collision” coverage, covers damage from fire, vandalism or falling objects (like a tree or hail). If you are leasing or financing your car, your lender likely requires comprehensive coverage. If you own your vehicle outright, it is optional insurance protection on your car insurance policy.
If you are shopping for auto insurance or are reviewing your current policy, you may want to consider comprehensive coverage. Learn what comprehensive insurance supports protect, how it is different from collision coverage and how limits and deductibles apply to the coverage.
If you are faced with an accident with another vehicle, or if you hit an object such as a fence, collision coverage may help pay to repair or replace your car. Collision coverage is typically optional. It may be needed, however, by your vehicle’s leaseholder or lender.
Collision insurance is a protection that supports paying to repair or replace your car if it’s damaged in an accident with another vehicle or object, such as a fence or a tree. If you are financing or leasing your car, collision coverage is typically required by the lender. If your car is paid off, collision is coverage on your car insurance policy.
MEDICAL PAYMENTS COVERAGE
Your family members or passengers who are driving the insured vehicle are injured in an accident, medical payments coverage may help pay for costs associated with the injuries. Covered costs may consist of surgery, hospital visits, X-rays and more. Medical payments insurance coverage is needed in some states and optional in others.
Medical payments coverage is a part of an auto insurance policy. This coverage is not available in all states. Medical payments coverage is sometimes known as medical expense coverage, or just “med pay.”
PERSONAL INJURY PROTECTION
Personal injury protection or PIP is only able in some states. Like medical payments coverage, PIP may support pay for your medical expenses after an accident. In addition, PIP may also cover other expenses incurred because of your injuries — for example, child care expenses or lost income. Personal injury protection coverage is important in some states and optional in other states where it’s available.
No-fault insurance is a one of the type car insurance that helps pay for your and your passengers’ medical bills if you’re injured in a car accident, regardless of who caused the accident. No-fault insurance is also known as personal injury protection or PIP insurance.
PIP is not available in all states, but it is needed in some and optional in others. You can see below for a complete list of states that want or offer no-fault insurance. Beginning in the 1970s, a number of states passed legislation to introduce “no-fault” auto insurance. As per the Insurance Information Institute, the goal was to simplify the process of determining which driver is responsible for an accident. This type of insurance is known as “no-fault” because your own policy helps cover your medical expenses after a car accident, regardless of whose fault the accident was.
OTHER TYPES OF AUTO INSURANCE POLICY COVERAGE
You can add the following optional coverages to your car insurance policy, depending on your situation. Your insurance agent can help you understand what each helps cover, so you can put together a policy that’s right for you.
- Rental reimbursement coverage/transportation expense coverage
- Gap coverage
- New car replacement coverage
- Towing and labour cost coverage
- Ride-sharing coverage
- Sound system coverage
- Classic car insurance
The various components of an auto insurance policy are available to help protect you and your vehicle. Need help understanding which coverages are required and optional in your state? Talk to a local agent.