Car insurance is basically any kind of insurance that a driver can buy for his or her car to protect against losses caused by car accidents. In reality, auto insurance policies cover a number of different things. Most of the time, this insurance will cover the insured person, the insured car, and any third parties who are involved. Different policies will say when each of these groups is covered and how.
Here are the different types of coverage you get when you buy car insurance.
- Liability insurance: Liability coverage is the most basic and important part of a car insurance policy, and most states require it. This coverage makes sure that if you cause an accident and are found to be at fault, your liability insurance will cover the costs of any injuries and property damage to third parties. Legal bills are covered by this plan. Remember that you can be sued for "pain and suffering" damages by someone else. Minimum insurance may not cover you enough in more serious situations. That's why many people advise drivers to buy more than the state minimum. Most of the time, three numbers show how much liability coverage there is. For example, liability limits of 20/50/10 mean that there is coverage of $20,000 per person for bodily injury, $50,000 per accident for bodily injury, and $10,000 per accident for property damage.
- Collision Coverage: If you get into an accident, collision coverage will pay for the repairs your car needs. Most of the time, collision coverage will be the most expensive coverage you have to buy. Insurance companies will call a car "totaled" or "written off" if it would be cheaper to buy a new one than to fix it.
- Comprehensive Coverage: This coverage will pay for any damage to a car that wasn't caused by an accident. Damages from carjackings, vandalism, natural disasters, and hitting an animal are all examples of damages that qualify.
- MedPay, PIP, and No-Fault Coverages: MedPay will pay for your and anyone else in your car's medical bills after an accident, no matter who was at fault. Other types of medical payment protection include Personal Injury Protection (PIP) and "no-fault" coverages. They cover more than MedPay, and some states may require them. These new coverages help pay for things like child care and lost wages.
- Coverages for Uninsured and Underinsured Motorists: UM (Uninsured Motorists) coverage will pay for your injuries if you are hit by a driver who doesn't have auto insurance and then leaves the scene. This coverage is required in many states. UIM coverage will pay for your damages if the driver who hit you caused more damage than their liability insurance could cover.
- Supplemental Coverages: Rental reimbursement is an add-on that covers damage or theft to rented cars. Auto replacement coverage makes sure that your car will be fixed or replaced in full, even if the costs are more than what it's worth now. Coverage for towing and labour takes care of you if your car breaks down on the road and needs to be towed. Most of the time, these extra coverages are sold as separate items or come with larger policies.
