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6 types of car insurance policy coverages
The moment you are planning to buy a new car or shopping for auto insurance, you may need to understand the common types of coverage which are found mostly on a car insurance policy.
To help protect you, your passengers and your vehicle in case you are involved in a car accident, there are various types of car insurance coverage for you.
Some of these coverages are mandatory, depending on where you live, and some are optional. To help you choose the right coverage for your situation, you are advised to have a better understanding what's required in your state and what each helps cover.
Types of car insurance coverage:
Auto insurance includes different coverages basically designed to financially protect you in case you are in an accident or your vehicle is damaged. Some types of coverage are mandatory while others are optional and offer added protection.
Six common car insurance coverage:
1. Auto liability coverage
2. Uninsured and underinsured motorist coverage
3. Comprehensive coverage
4. Collision coverage
5. Medical payment coverage
6. Personal injury protection
Details of each of these coverages and what they would cover-
1. Liability coverage
In most of the states, auto liability coverage is mandatory and for auto liability coverage drivers are legally required to purchase at least the minimum amount of liability coverage which is set by state law. Liability coverage has two components:
1. Bodily injury liability that may help pay for costs related to another person's injuries if you cause an accident.
2. Property damage liability helps pay for damage when you cause to another person's property while driving.
Learn more: Liability insurance: How to stay protected
2. Uninsured and underinsured motorist coverage
If you are hit in a car accident by a driver who does not have insurance, uninsured motorist coverage may help you pay for your medical bills or, in some states, you get repairs to your vehicle. But if you are hit by an underinsured driver, that means they have car insurance, but their liability limits are below to cover your resulting medical bills. In these situations, underinsured motorist coverage may help you though it depends on the laws of your state.
Uninsured and underinsured motorist coverage is mandatory in some states whereas optional in other states.
Learn more: What is uninsured motorist coverage?
3. Comprehensive coverage
Comprehensive coverage may help cover damage to your car resulting from acts like theft, fire, hail or vandalism. Comprehensive coverage may help pay to repair or replace your vehicle up to the vehicle's actual cash value if your car is damaged by a covered peril. The amount you'll pay out of pocket before your insurer reimburses you for a covered claim thus this coverage has a deductible.
Although comprehensive is typically an optional coverage, your lender may require it if you're leasing or paying off your vehicle.
Learn more: What is comprehensive auto insurance?
4. Collision coverage
Collision coverage may help pay to repair or replace your car up to its actual cash value and minus your deductible If you are involved in an accident with another vehicle, or if you hit an object such as a fence, or wall or like objects.
Collision coverage is basically optional but It may be required by your vehicle's leaseholder or lender.
Learn more: What is collision insurance?
5. Medical payments coverage
If you, your passengers or family members are driving in insured vehicles and are injured in an accident, medical payments coverage may help pay for costs associated with the injuries. Hospital visits, surgery, X-rays and more costs will also be covered.
Medical payments coverage is required in some states but optional in other states.
Learn more: What is medical payments coverage?
6. Personal injury protection
Personal injury protection (PIP) is available in some states only. PIP may help pay for your medical expenses after an accident like medical payments coverage, In addition, PIP may also help cover other expenses due to your injuries. For example childcare expenses or lost income.
Personal injury protection is required in some states but optional in other states it being available.
To learn more: Personal injury protection (PIP) Coverage (AKA no-fault insurance)
Other types of auto insurance coverage:
Based on your situation, you may be able to add the following optional coverages to your car insurance policy, . Your insurance agent is willing much to help you understand what each helps cover in order that you can put together a policy that's right for you.
1. Rental reimbursement coverage / transportation expense coverage
2. Gap coverage
3. New car replacement coverage
4. Towing and labor cost coverage
Which type of insurance is required by law?
Every state requires every driver to carry property damage and bodily injury liability insurance but the rule is not for New Hampshire. Depending on your state, other types of coverages may be required, . These car insurances uncertainly include uninsured and underinsured motorist coverage, and PIP.
Though comprehensive and collision coverage are not required by any state, many lenders require them for vehicle financing. In those cases, many lenders have to buy gap insurance to cover the difference between what you still owe on the vehicle and its current market value.
Get the right coverage for your car:
When it comes the question of car insurance, there is no one-size-fits-all approach . To help determine the auto insurance fit for you and your wallet it matters where you live, how you drive your vehicle and the vehicle you drive
Questions about where you live and your driving habits are asked by many online quoting systems to help suggest coverages that are worth considering. If you shop around for auto insurance quotes, you are advised be be sure to choose the same coverage for each quote in order that you have apples-to-apples comparisons.
YouTube video on 6 Types of Car Insurance Policy Coverages Auto Insurances