Jane Dotson
Auto insurance is a broad topic, with many different types of coverage available to drivers. The most basic type of car insurance is liability coverage, which is required in most US states. This covers another driver's injuries or property damage if the policyholder is found liable for an accident, up to the limits of their policy. Beyond this, there are several other types of auto insurance that drivers may want or need to consider, including collision coverage, comprehensive coverage, uninsured motorist coverage, medical payments coverage, and personal injury protection insurance.
| Characteristics | Values |
|---|---|
| Liability coverage | Covers another driver's injuries or property damage if you're found liable for an accident |
| Collision coverage | Covers damage to your car after an accident involving another vehicle |
| Comprehensive coverage | Covers damage to your car from incidents besides collisions, including vandalism, certain weather events, and accidents with animals |
| Uninsured motorist coverage | Covers your injuries or property damage if an uninsured driver is responsible for an accident |
| Underinsured motorist coverage | Covers your injuries or property damage if a driver with insufficient insurance is responsible for an accident |
| Medical payments coverage | Covers medical costs related to a covered accident, regardless of who is at fault |
| Personal injury protection | Covers certain medical expenses and loss of income resulting from a covered accident |
| Gap insurance | Covers the difference between what's owed on a vehicle and its actual cash value |
| Towing and labor insurance | Reimburses you for a tow and for the labor costs to repair your vehicle |
| Rental reimbursement insurance | Pays for a rental car if your vehicle cannot be driven after an accident |
| Classic car insurance | Provides specialized coverage designed for vintage and classic car collectors |
What You'll Learn
Liability insurance
The cost of liability insurance depends on various factors, such as the amount of coverage selected. Higher coverage limits will typically result in higher costs. The required coverage limits vary by state, and it is important to check the specific requirements for your state.
In addition to the basic liability coverage, there are also optional coverages that can be added to a policy. These may include uninsured and underinsured motorist coverage, personal injury protection, and medical payments coverage. These additional coverages can provide further protection in the event of an accident, especially if the at-fault driver has insufficient insurance or is uninsured.
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Collision insurance
It is important to note that collision insurance only reimburses the policyholder for damage to their own vehicle. It does not cover damage to other vehicles or objects, or any bodily injuries sustained in the accident. Additionally, collision insurance does not cover damage caused by theft, vandalism, natural disasters, or civil disturbances. These types of incidents may be covered by comprehensive insurance.
While collision insurance is not required by state law, it is often a requirement for leased or financed vehicles. It is a valuable form of coverage for vehicle owners who want to protect their investment and avoid the risk of paying out-of-pocket for collision repairs or replacement. Collision coverage can provide peace of mind, especially for newer or more expensive vehicles, and older vehicles that still hold good value.
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Comprehensive insurance
Comprehensive coverage is ideal for those who want peace of mind and protection against unforeseen events. It covers a range of incidents that are beyond your control, such as theft, vandalism, or natural disasters. This type of insurance can be added to various vehicle insurance policies, including auto, motorcycle, and boat insurance. It is not a separate type of insurance but rather a specific coverage added to an existing policy.
The cost of comprehensive insurance is typically based on the actual cash value of your vehicle. It has a deductible, which is the amount you agree to pay before the insurance company starts paying for damages. A higher deductible can lead to lower insurance costs, while a lower deductible results in higher insurance costs. Comprehensive insurance is usually limited to the vehicle's cash value, so it may not be worth carrying this coverage if your car has a low cash value or if you can easily afford repairs or replacements out of pocket.
When deciding whether to opt for comprehensive insurance, consider factors such as the value of your car, your financial circumstances, and your personal preferences. If your vehicle has a high cash value or you cannot afford repairs or replacements out of pocket, comprehensive insurance can provide valuable protection. However, if your car has a low cash value and you can comfortably cover any potential expenses, this type of insurance may not be necessary.
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Uninsured motorist insurance
Uninsured motorist coverage ensures that you are not left financially burdened if you are hit by a driver without insurance or with insufficient coverage. This protection extends to both bodily injuries and property damage caused by the uninsured driver. In the case of bodily injuries, uninsured motorist coverage can help pay for medical bills for you and your passengers, as well as compensate for lost wages, pain, and suffering. On the other hand, uninsured motorist property damage coverage can assist in repairing or replacing your vehicle and other damaged items.
While not all states mandate uninsured motorist coverage, it is highly recommended for all drivers. In states like California, it is automatically included in your auto insurance policy unless you specifically waive it in writing. Even if your state does not require it, opting out of uninsured motorist coverage leaves you vulnerable to significant out-of-pocket expenses in the event of an accident with an uninsured driver.
Additionally, uninsured motorist coverage can provide protection in hit-and-run situations. If the at-fault driver flees the scene and cannot be identified, your uninsured motorist coverage may still apply, depending on the specific laws in your state.
When considering uninsured motorist coverage, it is important to understand the differences between uninsured and underinsured motorist protection. While uninsured motorist coverage pertains to accidents with drivers who have no insurance, underinsured motorist coverage comes into play when the at-fault driver has insufficient insurance to cover your damages fully. Some states that require uninsured motorist coverage also mandate underinsured motorist protection, but this varies, so it is essential to check with your state's Department of Motor Vehicles.
In summary, uninsured motorist insurance provides valuable financial protection in the event of an accident with an uninsured or underinsured driver. It helps cover medical expenses, lost wages, and property damage, ensuring that you are not left bearing the full cost of someone else's negligence. When purchasing auto insurance, carefully review the uninsured motorist coverage options available to you and consider the benefits of adding this extra layer of protection.
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Medical payments coverage
MedPay helps pay for medical expenses resulting from a car accident, including hospital visits, ambulance fees, surgeries, and dental procedures. It covers the driver, their family, and passengers in the car at the time of the collision, as well as the policyholder if they are injured as a pedestrian. MedPay does not cover lost wages due to injuries from an accident.
MedPay limits typically range from $1,000 to $10,000, depending on the state and insurer. It is generally recommended to carry coverage equal to your health insurance deductible so that MedPay can be used to cover out-of-pocket medical expenses. If you do not have health insurance, a higher MedPay limit is advisable to help pay medical bills after an accident.
MedPay is especially useful if you are unsure if you could afford medical bills after a car accident. Even if you have health insurance, MedPay can help cover your out-of-pocket costs, such as deductibles and co-pays. If you do not have health insurance, MedPay can provide peace of mind and help you avoid the financial burden of major medical expenses.
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Frequently asked questions
The three main types of car insurance are liability, comprehensive, and collision. Liability insurance covers another driver's injuries or property damage if you're found liable for an accident, up to the limits of your policy. Comprehensive insurance covers damage to your car due to incidents besides collisions, including vandalism, certain weather events, and accidents with animals. Collision insurance covers damage to your car after an accident involving a collision with another vehicle or object.
Basic car insurance is known as liability insurance. It covers damages caused to other people, including medical bills for other drivers in an accident where you’re at fault, as well as property damage.
The most basic car insurance policy is minimum coverage car insurance. The amount of insurance required to meet your state's minimum requirements varies, so you'll need to check the laws specific to your location.
