While you can get by without car insurance, it’s important to weigh the pros and cons of each type before making a decision. Here’s what you need to know about the most common types of car insurance:
How much insurance you need.
Before purchasing car insurance, you’ll need to know how much coverage you’ll need. In some states, this is the minimum amount required by law. In other states, it’s just what’s recommended.
It’s important to consult your state’s Department of Insurance for details about your specific requirements and for advice on choosing the right amount of insurance. Some things that can affect how much vehicle coverage you’ll need include:
- Whether or not you have a loan on the car (loan requirements vary from lender to lender)
- The age of your vehicle (the older or more expensive it is, the higher your premiums)
- Your driving record (if there are incidents on record)
- Where you live and commute in relation to where others do so (high-crime areas tend to require more protection)
Liability car insurance.
Liability car insurance covers damage to other people and their property. It is the most basic form of coverage and is required by law in all states, except New Hampshire. Liability coverage can be purchased in a single policy or separate policies.
Liabilities: Bodily injury liability pays for injuries caused by you or someone driving your car to another person that results in medical costs, lost wages, pain and suffering and more. Property damage liability pays for damages caused by you or someone driving your car to another person’s vehicle (or any other property) that results in medical costs, lost wages, pain and suffering, loss of use and more if it was not specified on the police report
Collision insurance covers damage to your car from an accident. It’s usually required by your lender if you have a loan on the car and can only be purchased in conjunction with comprehensive insurance, which covers all other kinds of damage to your vehicle.
Collision insurance is not for theft or vandalism—if someone breaks into your car, or it gets keyed while parked in front of the post office (true story), that’s not covered by collision. It also doesn’t cover damage caused by animals like deer, so if you hit one and send it flying through the windshield, that’s not covered either.
Comprehensive insurance is the most popular because it covers damage to your car in a variety of ways, including fire, theft and vandalism. It also covers incidents such as hail damage and other natural disasters. Comprehensives do not cover normal wear and tear on the vehicle or damage caused by hitting animals (such as deer).
Uninsured/underinsured motorist coverage.
If you’re hit by an uninsured driver or by a driver whose insurance doesn’t cover enough, this type of coverage can help. It provides medical expenses to pay for your treatment, lost wages if you are unable to return to work and pain and suffering damages (which may be awarded in addition to any other damages).
Medical payments coverage.
Medical payments coverage is a part of no-fault insurance. No-fault insurance means that the party at fault for an accident does not have to pay for damages. Instead, everyone’s own insurer will pay for their damages up to the limit of what they purchased in coverage.
Medical payments coverage covers you and your passengers if you are injured in an accident and can be purchased as part of a personal injury protection (PIP) policy or as a separate policy.
If you do not have this kind of coverage and are involved in an accident where someone else is deemed responsible, then it may be difficult to get compensation for any injuries sustained during that collision. Additionally, if you do not have medical payments coverage and become injured due to someone else’s negligence, then there could potentially be financial consequences associated with needing ongoing medical care after such an incident; however this is only possible if they were convicted on charges related specifically relating their role within causing said collision (which would require them having admitted guilt).
Personal injury protection (PIP).
Personal injury protection (PIP) covers medical expenses for you and your passengers. It can also cover lost wages and other expenses. PIP is required in some states, but it’s usually included in your comprehensive insurance.
There’s a lot to think about when it comes to car insurance.
When you’re shopping for car insurance, there are a lot of terms that can be confusing. If you’re not sure what something means, ask your insurance agent to explain it in plain English.
You should also know that not all auto policies are created equal—and there is no such thing as “the most common” car insurance policy. Every state has its own regulations regarding which coverages are required by law and which ones aren’t, so keep in mind that what’s common in one state might not be common at all elsewhere. That said: here’s what we mean when we say “common.”
Hopefully, this article has given you a better understanding of the different types of car insurance and how they work. As we said at the outset, there are many types of coverage and ways to protect yourself against risk. The key is knowing which ones are right for you. If you’re still unsure about what type of policy or coverage best suits your needs, don’t hesitate to contact one of our agents today!