What Types of Car Insurance Do You Need?
The amazing thing is that almost every vehicle owner needs some type of insurance, but few of them really understand the coverage contained in their policy. If you understand what coverage you are paying for each month, you are much more likely to be satisfied if you ever do need to make a policy claim. Take a moment to review this simple outline of the basic types of auto insurance you may choose to purchase.
Six Common Kinds of Auto Insurance Coverage
Policies vary from state to state and from insurer to insurer. Please discuss the specifics of any policy you plan to purchase with your own local agent or insurer. This is intended to provide a brief summary, and it is not intended to illustrate any particular policy.
This article discusses these 6 types of car insurance:
- Personal Injury Protection (PIP)
- Uninsured Motorist
Basically, this covers the “other guy”. If you are judged to be the driver at fault, you could be liable for property damage and injury expenses. Moreover, each state requires some amount of minimum liability insurance. When uninsured drivers are discussed, it usually refers to vehicle owners without this basic coverage.
If you would like more information, you can learn what liability insurance protects you against.That page also briefly summarizes individual state requirements across America.
This type of protection pays to repair your vehicle after an accident. This is, of course, in the case that nobody else is liable so you can get that at-fault driver’s policy to pick up the tab. Depending upon which options you selected when you purchased your coverage, you might need to pay a per-accident deductible before your company will start to pay.
Do you absolutely need collision insurance? If you have an auto loan, your lender may require it. Otherwise, you may choose to skip the extra premiums and risk being responsible for repair bills.
This covers your vehicle in case of different types of non-accident damage. If your car gets damaged in a storm, flood, or other natural event, comprehensive car insurance picks up the tab. Other examples could be theft and vandalism.
Uninsured / Under-insured Motorist
If another driver causes an accident, but lacks coverage, this type of coverage can help you pay for damages to your own vehicle. A substantial portion of U.S. accidents are caused by drivers who lack liability insurance, or only have basic coverage with low maximums, so this is something to discuss with your agent or company. If you have collision coverage, it might also help pay part of the tab if you are struck by driver without his or her own coverage.
Medical / Personal Injury Protection / PIP
PIP covers injury related expenses no matter who is at fault. Again, some states have fairly low liability maximum amounts and medical bills can be enormous. In addition, this type of coverage may also compensate victims for lost time at work.
This can be very handy if you still owe money on your auto, and especially if you owe more money on your auto than the actual book value. In an accident, your insurer may choose to declare your vehicle a total loss, and this is not always a bad thing. Some damages are difficult to repair properly. But if you need to pay off an auto loan, GAP will help make up the difference between what you owe and what the insurer will pay out.
Which Kinds of Car Insurance Do You Need?
Your own needs will vary depending upon the value of your vehicle, your ability to pay for damages, and if your loan has already been paid off. If you need more help, you can seek out a local agent who should be able to help you compare the costs and benefits of your options.