Car owners in most states are required to have car insurance. It can protect you against financial losses if you happen to be involved in an accident. Every car insurance policy offers specific coverage, which can help you pay for everything from medical expenses to vehicle repairs and more.
If you’re shopping for car insurance, understanding the common types of coverage can help you select coverages you deem necessary. Let’s take a look at the common types of coverage in car insurance. Liability coverage Liability coverage protects you financially when you’re legally responsible for an accident. It covers the cost of all damages and injuries as a result of the mishap. There are two types of liabilities included in a car insurance policy: bodily injury and property damage. Bodily injury liability coverage is designed to pay various medical expenses for the other party. This type of coverage is not only mandatory in most states, but there is also a minimum requisite for the amount of bodily injury liability every driver must carry. Property damage liability will cover the cost of repair to the other party’s vehicle or any other property that is possibly damaged, such as fences, lamp posts, or mailboxes. However, keep in mind that it doesn’t cover damages to your car or property. Collision coverage To pay for your own vehicle repair after a mishap, you need collision coverage. It can cover repair and even replacement costs for your car if you’re involved in an accident with another vehicle. If you happen to hit objects like fences or lamp posts and damage your car, collision coverage can help you pay for those repairs too. This type of coverage may not be worth it if your car is already in bad condition, as it does not cover the cost of any mechanical failure. On the other hand, if your car is expensive or new, getting collision coverage can prevent you from financial distress. Comprehensive coverage Accidents are not the only cause of car damage. If your car is damaged or destroyed from fire, earthquake, flood, falling object, or hitting a deer, comprehensive coverage can help reimburse you. Even if your car gets vandalized or someone breaks your car window, or in the worst case, steals your car, comprehensive coverage can be useful in such situations too. Getting car insurance with this coverage can increase the total cost significantly, so purchase it only if it fits in your budget. Also, if your car is easily replaceable, paying so much extra money for comprehensive coverage may not be necessary. Personal injury protection If a car accident inflicts injuries upon you or and anyone riding in your car, personal injury protection can help pay all medical costs for you and other injured passengers. Note that this type of coverage is applicable regardless of which party is at fault. Since accidents often involve some form of injury, getting personal injury protection coverage is a wise decision. In addition to injuries, this type of coverage may also cover lost wages if you or someone riding cannot work. Plus, it can pay for rehabilitation expenses, childcare services, household services, and funeral costs. Uninsured/underinsured motorist protection Not all drivers in the country are required by law to have car insurance. And, if you’re in an accident with an uninsured driver who’s at fault, uninsured motorist protection can cover you. In case the other party has insurance but not enough to cover your medical expenses and property damage, underinsured motorist protection coverage can help you pay the remaining cost. In other words, this type of coverage is like liability insurance for your own damages, even when you’re not legally responsible for an accident. Uninsured and underinsured motorist coverage can also cover you in situations where you are a pedestrian or a victim of a hit-and-run. In general, the more the coverage, the higher will be the total cost of your car insurance policy. It’s important to note that some of these coverages may be mandatory depending on the state you live in. Also, it’s wise to include optional coverage if it is inexpensive, as it can help you save a lot of money in unforeseen circumstances.