The Kinds of Car Insurance Coverage
- Car insurance offers an array of coverage options.luxury car - model toy car image by alma_sacra from Fotolia.com
Purchasing a car insurance policy can be a confusing and overwhelming process, unless you have a clear understanding of the types of insurance available and how they benefit you. Each state has minimum requirements for insurance and sets policies that govern deductibles, types of coverage available and rates, but the basic types of car insurance coverage are similar in every state.
- Most states require car owners to carry liability insurance at a minimum. Liability insurance covers damage you may cause to people or property and provides you with legal protection in the case of a lawsuit for damages. Liability insurance does not cover the insured members on your policy, so any injury you or a covered household member sustain in the event of an accident will not be covered by liability insurance.
- Collision insurance covers damage to your own car in the case of an automobile accident regardless of who is at fault. Collision repairs are subject to a deductible that you select before the policy is underwritten. Lower deductibles result in higher insurance premiums, so to save money, select the highest deductible you can afford to pay in case of an accident.
- Comprehensive insurance covers your vehicle when the damage is not due to an automobile accident. Types of nonautomobile accident damage include flood, fire, theft and vandalism by people or animals. Claims filed for comprehensive coverage are subject to the deductible chosen prior to underwriting. As with collision insurance, the lower your deductible, the higher your insurance premium will be. If you financed or leased your car, the lender may require you to carry comprehensive insurance on the automobile in order to protect the lender's financial interests.
Uninsured and Underinsured Motorist Insurance
- Uninsured and underinsured motorist insurance protects all household members on your insurance policy and any passengers in your insured vehicles when they are injured in an accident caused by a driver with no insurance or limited insurance. Uninsured motorist insurance covers medical bills and/or death benefits for each injured passenger up to the limit per person on the policy. If you do not have collision coverage on your automobile, uninsured motorist insurance may cover damages to your car depending on what your policy stipulates; however, the policy will probably not be enough coverage for large amounts of damage.
- Personal injury protection insurance covers all members on your policy and passengers in your automobile for personal injury costs resulting from an accident. Personal injury protection covers medical expenses up to a limit per person and some policies have provisions, if elected, to cover lost wages due to the accident.
- Various other types of specialized insurance are available for automobile drivers such as rental car reimbursement, accidental death benefits, towing coverage and coverage for custom parts and equipment. Financial lenders often offer gap insurance, which covers any difference between the book value of an automobile when totaled and the actual remaining loan value.