“What kind of auto insurance coverage will I get?” This is the standard question after buying a vehicle.
For starters, you have to know the primary insurance coverage mandated by your state since the laws for car insurance are set at the state level. Then you can consider additional and different kinds of coverage that will best suit you.
Since the invention of automobiles, car crashes have been unavoidable.
These accidents would result in damages and the persons at fault are often unable to pay for them.
Connecticut is the first state to mandate the drivers to have financial responsibility in the event of a car crash or accident resulting in property damage, injury, and death in 1927.
Other states followed suit, and in the ’70s, auto insurance is mandatory in nearly every state. This is the reason why you have to purchase a minimum level of insurance coverage for your car to be registered and for you to drive legally.
It’s understandable for new drivers and even for those who never filed a claim to feel somehow unrewarded for paying a costly auto insurance premium.
However, in reality, we really cannot control unfortunate and unexpected circumstances at all times.
Statistics would tell us that in 2016, there are approximately 7.3 million reported vehicle crashes in the US and 5 million of which involved property damage.
* Hence, auto insurance will give us some peace of mind as it alleviates our anxieties in the event of an accident by protecting us from impending financial and property loss.
The insurance provider, through a contract and as outlined in our selected policy, will pay for our failures in exchange for a premium payment.
Listed below are different types of car insurance that you have to know so you could have an informed choice:
Liability Insurance Coverage
Liability coverage, also known as casualty insurance, is mandated in most US states and serves as one of the legal requirements to drive a car.
This coverage includes both bodily injury and property damages.
If you are at fault, it will cover medical and hospital bills, and other medical costs related to another person’s injury as well as pay for the property damages of the injured party.
It may also cover lost earnings and suffering and other expenses depending on the limits you select. Each state has its limits and is often inadequate.
You may opt to raise your liability limits to a level that could cover almost any event by paying an additional premium so that you can protect yourself against substantial damage claims.
Collision insurance helps pay to repair or replace your damaged car in the event of a collision with another vehicle or with an object, regardless of who was responsible.
Comprehensive insurance coverage helps pay to repair or replace your car if it’s damaged by unexpected events such as weather and civil disturbance.
It also helps cover for theft, collision with animals and when an object fell and damaged your car.
Uninsured Motorist Insurance
This type of insurance pays you when you have incurred damages from an uninsured driver or a hit-and-run driver.
It takes the place of the insurance that the uninsured driver-at-fault should have had but did not. Most of the times, this coverage is paired with underinsured motorist insurance.
Underinsured Motorist Insurance
To save money, many drivers opt for the minimum in liability coverage.
However, in the event of an accident, this might not be enough to provide the injured party with the needed compensation.
Underinsured motorist insurance can pay you for enough coverage that is beyond the limit of the underinsured motorist’s policy.
Medical Payments Coverage
This type of coverage helps pay for your medical expenses if you are injured following an accident, regardless of who caused the crash.
This coverage also provides for your passengers’ medical expenses. This coverage is optional and not available in all states.
Personal Injury Protection Insurance
Personal injury protection insurance (PIP) may cover certain medical expenses, similar to medical payment coverage.
However, unlike medical payment coverage, PIP also can cover for the loss of income, rehabilitation services, funeral costs and services such as childcare and other expenses resulting from a covered accident.
It could pay as much as 80% of medical expenses depending on the limits of a policy.
The moment a car hits the road after purchase, its value quickly depreciates making the outstanding amount of a car loan exceeds the value of the vehicle. If you are a Gap insurance policyholder, you can pay for the amount owed on a car loan after a total loss or theft.
Towing and Labor Insurance
This type of insurance that covers towing and labor cost is usually included if you have comprehensive car insurance. The part of labor cost generally refers to labor charges you may incur when your car had a breakdown, and you need to get it up and running.
Rental Reimbursement Insurance
As a typically optional type of car insurance, a rental reimbursement coverage may be added so you can pay for a rental car or an alternate mode of transportation when your vehicle is being repaired after an accident.
Classic Car Insurance
Classic car insurance provides specialized coverage intended for the distinct needs of owning and driving a vintage and classic car.
The insurance company will pay for the agreed-upon value in the event of loss, collision and more.
Insurance definitions and explanations in this article are for general information purposes only.
Insurance providers may have their standardized definitions and information enclosed in individual insurance contracts and policies. Every state may also vary in the use of terms and availability of a system.
It’s best to talk to a local agent who will further discuss these with you.
An agent can help you with your state’s requirements and coverage limits. You can even ask for a free quote now. Choose to get protected from untoward incidents and the unexpected.