5 Types of Auto Insurance Coverage

Types of Auto Insurance Coverage | asuranci.com
How do you know what types of auto insurance coverage you need? Is it required by your state? Are there ways to save money and still have the right amount of auto insurance coverage? Below we detail 5 types of auto insurance coverages and provide a few scenarios where you would benefit from having a non-required coverage added to your policy along with some tips to save some money depending on your vehicle and budget.

Types of Auto Insurance Coverage

Here are some common auto insurance coverage options.
  1. Liability Coverage
  2. Personal Injury Protection
  3. Collision Coverage
  4. Comprehensive Coverage
  5. Uninsured and Underinsured Motorist Coverage

1. Liability Insurance

All states require a minimum amount of liability coverage in order to legally drive a vehicle.
Liability insurance covers you when driving any vehicle you own or if you drive someone else’s car with their permission. Liability coverage is perhaps the most important type of protection that auto insurance policies offer, and the one that almost all states require. Bodily injury liability applies to damages you cause to others. It covers their medical bills and lost wages. Property damage liability pays to repair or replace property that you damage or destroy. This includes other cars or property, such as fences. It can also pay for "pain and suffering" damages if someone sues you after a car accident. Almost all states and the District of Columbia require minimum liability coverage amounts by law.
Types of Auto Insurance Coverage
Types of Auto Insurance Coverage

2. Personal Injury Protection

While Comprehensive coverage may be something you don’t need to purchase, Personal Injury Protection (PIP) is something you should. The costs associated from an accident can quickly add up, and in order to cover those costs Personal Injury Protection is available. Personal Injury Protection (PIP) and Medical (MedPay) coverage pays for both medical expenses and lost wages to the policyholder and any passengers injured in the vehicle in the event of an accident. Some experts advise people with good medical and disability policies to only take on the lowest limit of PIP coverage required by their state. Some states, such as New Jersey, allow drivers to reject PIP entirely.

3. Comprehensive Coverage

What if something happens to your car that is unrelated to a covered accident - weather damage, you hit a deer, your car is stolen - will your insurance company cover the loss? Liability insurance and collision coverage cover accidents, but not these situations. These situations are covered by Comprehensive coverage. Comprehensive coverage is one of those things that is great to have if it fits in your budget. Anti-theft and tracking devices on cars can make this coverage slightly more affordable, but carrying this type of insurance can be costly, and may not be necessary, especially if your car is easily replaceable.

4. Collision Coverage

Collision coverage insures you in the event of any kind of accident, whether it's with another car or an object, such as a utility pole or fire hydrant. If you have an older car, and the cost of repairing or replacing your car is likely more than its value, you may want to waive both collision and comprehensive coverage. Unlike liability coverage, this type of coverage is not required by law, but according to 2008 NAIC data, 77 percent of insured drivers purchase comprehensive coverage in addition to liability insurance and 72 percent buy collision coverage. Furthermore, your bank (if you are financing your car) or your leasing company (if you are leasing your car) will likely require that you carry this coverage until you have paid for your car in full or for the life of the lease.

5. Uninsured Motorist coverage

Uninsured Motorist coverage provides you protection from crashes with motorists not carrying car insurance, as well as covering you in the event of a hit-and-run accident. Also, uninsured motorist insurance coverage comes into play when an at-fault driver doesn't have enough liability coverage to pay for the damages from an accident. Most states require drivers to carry some level of uninsured motorist coverage.
You need uninsured motorist coverage if you’re involved in an accident with:
  • A driver who carries no auto insurance whatsoever
  • A driver who carries insurance coverage that falls below the state’s required minimums
  • A driver who is insured by a company that is financially unable to cover your losses
  • A driver who hits you and flees the scene.
Saving tip: It's usually relatively inexpensive to add uninsured/underinsured motorist protection to your car insurance policy, especially considering the amount of protection it offers.

Things to Remember About Auto Insurance Coverage

There are a variety of insurance types that you can combine to find the best coverage for your needs
Certain types are required by state, so make sure you find out your state’s regulations for insurance
An easy way to save on auto insurance is by comparing free insurance quotes from several companies
Most of these coverages are optional, and adding them to your policy will increase your premium.
When in doubt, ask your agent to clearly explain the car insurance coverage options to you.

Choosing the bare minimum coverages doesn’t always generate cheap insurance quotes. In fact, your cheap insurance quotes may be higher than anticipated when you select bare minimum coverages. Carriers provide cheap insurance quotes to those who carry the least amount of risk. Minimum coverages make you a higher risk and this increased risk makes your cheap insurance quotes more expensive. Even if you don’t want the most coverage, choose coverages higher than state minimums to generate more competitive, cheap insurance quotes. Thank you.

2 Responses to "5 Types of Auto Insurance Coverage"

  1. Auto insurance is one of the most used types of personal insurance. Most states require that you purchase some kind of insurance coverage to drive legally in the state

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