Types of car insurance coverage can be confusing. Do you know what types you need? Does your state require it? Are there ways to save money and still have the right amount of coverage? In this article, we detail 5 types of coverage and offer some scenarios in which you would benefit from adding non-mandatory coverage to your policy, along with some tips for saving money depending on your vehicle and your budget. Liability insurance is the most common type of car insurance coverage. It covers you in the event that you have a covered car accident and the accident is determined to be the result of your actions.
Liability insurance will cover the cost of repairing any property damaged by an accident, as well as the medical bills for the resulting injuries. Most states have a minimum requirement on the amount of liability insurance coverage drivers must have. However, if you can afford it, it's usually a good idea to have liability insurance that exceeds your state's minimum liability coverage requirements, as it will provide you with additional protection if you are found guilty of an accident, since you are responsible for any claim that exceeds the maximum limit of your coverage. You don't want to risk having to pay a large amount of money because your policy limit has been exceeded. Collision coverage is another type of car insurance that pays for repairs to your car if there's a covered accident.
If your car is destroyed (when the repair cost exceeds the value of the vehicle) in an accident, collision coverage will pay for the value of your car. Comprehensive coverage (other than collision coverage) is a type of car insurance that covers situations that are not related to a covered accident, such as weather damage, bumping into a deer, or having your car stolen. While state laws require that all drivers be insured, sadly that's not always the case. Another problem that can arise is that, while a driver may have liability insurance, many states have relatively low minimum coverage requirements that may not be sufficient to cover all the expenses of an accident. Therefore, if someone is legally responsible for damages related to an accident, they won't receive any payment if they don't have coverage, or they'll receive less than what they need to cover the cost of the damages if their damages exceed the amount of their coverage.
This is the kind of situation where protecting uninsured or underinsured motorists would help with expenses. The six most common types of auto insurance are auto liability coverage, coverage for uninsured or underinsured motorists, comprehensive coverage, collision coverage, medical payments, and personal injury protection. Some of these coverages may be mandatory in your state, while others are only optional. Even if your state doesn't require a type of coverage, you may be able to purchase it from your insurer. The most common types of car insurance coverage are liability coverage, comprehensive and collision coverage, coverage for uninsured or underinsured motorists, PIP and MedPay. For more information on these types of car insurance and how to get car insurance quotes from the best car insurance companies in general, check out WalletHub's guides. It only covers damage to the car caused by non-collision accidents and will not cover personal items, such as the wallet or car radio, in the event of theft.
You'll need car insurance to finance or lease a car, home insurance to apply for a mortgage, health insurance to avoid fees in some states, and life insurance to protect your family in the event of death. A full-coverage auto insurance policy includes comprehensive and collision coverage, as well as liability. These are the most common types of car insurance; however many insurance companies also sell other types of coverage such as supplemental insurance and rental reimbursement. If you're concerned about the reliability of your car, emergency roadside assistance insurance and mechanical breakdown insurance are great types of coverage.
Most large auto insurance companies offer these types of coverage; you may want to consider adding them to your policy. There are no state laws that require drivers to purchase collision or comprehensive coverage; however most lenders and landlords require both types of insurance for leased or financed vehicles. Understanding different types of auto insurance can be overwhelming but it's important to know what kind you need in order to protect yourself financially in case something happens. Liability insurance, collision coverage and comprehensive coverage are all mandatory in most states but there are other types such as uninsured/underinsured motorist protection and personal injury protection that can provide additional protection depending on where you live.
Additionally, emergency roadside assistance and mechanical breakdown insurance can help protect you from unexpected costs associated with vehicle repairs. Knowing what type of auto insurance is required by law in your state as well as what type is best suited for your needs can help save you money while still providing adequate protection.
