Figuring out the kind of auto insurance you need for ideal coverage can be tricky if you don’t know what each type of coverage entails. Not every type of auto insurance provider offers every type of auto insurance plan. Let’s go over the major types of auto insurance providers will carry so you can choose an auto insurance plan that works best for you.
Auto liability coverage is pretty simple, and it’s mandatory in most states. So it will be included with most auto insurance carrier plans regardless of payment or deductible. Liability coverage is made of two parts.
Body injury liability helps to pay for costs related to another person’s injuries if you are found at fault for an accident. Property damage liability helps pay for damage that you cause to another person’s property while driving. In essence, this type of insurance covers any damages you might cause.
Uninsured/Underinsured Motorist Coverage
This insurance is a common choice because it covers you if you’re hit by a driver that doesn’t have any or enough insurance and you end up needing help paying for medical bills or repairs to your vehicle. This means that you’ll still get the coverage you need even if someone who hits you or damages your vehicle doesn’t have the money to pay for your treatment or repairs. This is required in some states but only optional in others.
Comprehensive coverage is the default coverage type offered by many auto insurance plans. It covers not only damage from automobile accidents but also damages to your car from other life events like theft, environmental damage, fire, and more. It's often considered a great part of any insurance plan because your car can be damaged by more than just another driver on the road. However, it’s rarely a required coverage in most states.
As the name suggests, collision coverage helps if you are ever involved in an accident with another vehicle or if you hit an object with your vehicle. This coverage helps you pay to repair or replace your car, and most plans cover this value up to its actual cash value without your deductible. It might be required by your vehicle’s lender or leaseholder but is rarely required by state law.
Medical Payments Coverage
Medical payments coverage pertains to you or any passengers who may be driving the insured vehicle and who are injured in an accident. It covers any medical payments that might help to pay for the costs associated with those injuries. Coverage details can vary from plan to plan, but they usually incorporate things like hospital visits, x-rays, surgeries, and more.
Some states require medical payments coverage while others do not.
Personal Injury Coverage
Personal injury coverage is very similar to medical payment coverage but is distinct in its own way. This coverage, or PIP, is only available in certain US states and it pays for your own medical expenses after an accident. It’s even more thorough, however, as it helps cover other expenses that arise as a result of your injuries.
For instance, PIP coverage may cover the expenses incurred from lost income if you can’t go to work as a result of your injuries. It may also cover things like childcare expenses. Because of this comprehensive coverage, it’s required in some states but only optional in others.
Gap coverage is an important type of coverage to consider if your car is still being loaned and you won’t be able to pay it off anytime soon. It covers the cost of your loan if your car is totaled or stolen, whereas you would normally need to pay back the entirety of the loan either upfront or overtime.
As a result, gap insurance might be critical to prevent bankruptcy or financial hardship in the event of a total loss of a loaned car. It's particularly important for new vehicles that you've barely begun to pay off, while it’s less important if your car is almost entirely paid off.
Comprehensive car insurance usually does not cover either of these two aspects. As their name suggests, towing and labor insurance can reimburse you for telling and labor costs to both move and repair your vehicle after an accident. This insurance is good if you don’t have a lot of disposable income at one time but can afford a slightly higher monthly payment for your insurance package.
Rental Reimbursement Coverage
Rental reimbursement coverage is another specialized insurance type that helps you pay for a rental car and other associated expenses if your vehicle can’t be driven after an accident. For instance, your car may be taken to a shop for a number of weeks while repairs are underway, and you may still need to get around town. Rental reimbursement coverage takes care of the rental costs rather than that money coming out of your pocket.
This final niche coverage type provides specialized insurance for the unique needs of any classic or vintage vehicles you may own. These vehicles usually have higher repair and maintenance costs than modern vehicles both because of their perceived value and rarity of certain parts. As a result, it can be quite costly to restore a vintage or classic vehicle after an accident.
It’s a good choice if you own one or more vintage vehicles and take them out to drive frequently. But it’s less useful if you normally only tinker with your classic car and only drive it rarely.
All in all, there are lots of car insurance options available for your needs. Most people will settle on a default plan with comprehensive coverage and maybe one or two extras. But others might want a more specialized coverage collection with lots of small insurance plans rather than a comprehensive plan. It’s all up to you, so be sure to ask your insurance provider what types of plans they offer so you can get the coverage you need. Good luck!