Car insurance – while it may not be everyone’s favorite topic – is very important to your health and pocketbook. If you’re uneducated in regards to your insurance, the type of policy you currently have, and the type of coverage you actually need, then it’s entirely possible that you’re gambling away your future.
5 Types of Car Insurance Explained
Looking through a brochure of car insurance policies and coverage plans can quickly become overwhelming. They all start to look pretty similar after a few minutes. With that being said, here are a few of the most common types and what you need to know.
States require drivers to carry some type of car insurance. In most cases, the basic coverage they’re referring to is liability insurance. Should you get in a car accident and the fault is on you, liability insurance covers the cost of repairs to property damaged in the accident (vehicles and buildings), as well as medical bills that result from injuries.
While there are minimum requirements for liability insurance, it’s smart to pay for any extra coverage you can afford. Medical bills can add up in a hurry and you don’t want to get stuck carrying this costly burden.
The issue with liability insurance is that most policies don’t actually cover your vehicle. Therefore, you may end up having to foot the bill for any of your own repairs. That’s why it’s smart to also have collision insurance.
With collision insurance, your insurance company will pay for repairs on your vehicle. And if your car is totaled, you’ll get a payout for the value of the car.
Comprehensive and Collision Coverage
When it comes to liability and collision insurance, both only cover auto accidents. If something else happens to your car – such as theft, hail damage, or an animal collision – the insurance company won’t cover it. This is where comprehensive and collision insurance comes into play.
“If your car is not insured and involved in an accident, you might have to pay to rent a car or cover repairs yourself,” Acceptance Insurance explains. “Comprehensive and Collision is a much better value because, even if you’re not involved in an accident, you can still be protected against theft, fire, vandalism and windshield damage.”
Personal Injury Protection
If you decide not to go with comprehensive coverage, you should definitely get personal injury protection. Also known as PIP, these policies help cover medical bills related to injuries received during an accident. The great thing about PIP is that it also covers the medical bills of your passengers. Furthermore, it doesn’t matter who was at fault, this policy takes care of everything. It should be noted, though, that PIP isn’t available in every state.
Uninsured Motorist Protection
While every driver is required to have car insurance, the simple truth of the matter is that some drivers don’t follow the rules, and others have extremely poor coverage.
So, if you’re in an accident and the other driver is at fault, it’s possible that the payment you receive from the insurance company won’t be enough to cover you. In this case, you need uninsured motorist protection to help with expenses. Thankfully, you can usually add this policy for just a few dollars per month.
Don’t Be an Uninformed (or Uninsured) Driver
Car insurance admittedly isn’t everyone’s favorite topic. After all, the number of times the average person actually needs to use their insurance is very small. However, when you do need it, your insurance can protect your future.
Familiarize yourself with the basic types of insurance and make an educated decision regarding how you want to protect your family.