No matter which auto insurance company you purchase coverage from, it’s important to understand the type of auto insurance plans available so that you make sure to purchase the right amount of coverage that works for your needs. In general, your car insurance will cover damage, vandalism, and theft of your vehicle. The other elements of your policy will determine which other types of coverage you have:
Liability insurance covers damage that you cause to others in a car accident when you are at fault, including vehicle repair costs and medical bills from any resulting injuries. However, it doesn’t cover the damage to your vehicle. Most states will have a minimum coverage amount, so it’s important to determine what the laws are in your state so that you are adequately covered. Liability insurance above the minimum requirement helps provide extra protection for damage caused by an accident that is your fault, which helps minimize out-of-pocket costs as you are responsible for claims that exceed the limit of your coverage.
Collision coverage pays for repairs to your vehicle in the case of an accident. If your car is totaled during the accident, or the repair costs exceed the vehicle’s value, then this type of coverage will pay for the value of your car. Individuals with newer or more expensive vehicles are recommended to purchase this type of coverage. If you have a lienholder, then this type of coverage is required.
Comprehensive insurance covers you if something happens to your car that’s unrelated to an accident. For example, if a tree branch falls on your vehicle, there is weather damage, your car is stolen, or you hit an animal, comprehensive coverage ensures that you can cover repair costs. If you are a lienholder, this type of coverage is required for your policy.
Personal injury protection (PIP) is recommended for everyone if available in their state. This type of coverage helps pay medical bills, lost wages, and other damages for the individual and their passengers in the case of an accident, no matter what party is at fault. PIP coverage is required in no-fault states as it protects the driver regardless of who is legally liable.
Though state laws mandate that all drivers should be insured, there are still uninsured motorists on the roadways. If you are in an accident and the other party is at fault, you will not receive any payment if they don’t have coverage or you may receive less than you need if they have limited coverage. For this reason, uninsured or underinsured motorist protection helps cover your expenses when your damages exceed the other driver’s coverage amount.