Car insurance can sometimes be expensive and confusing, but they are almost always compulsory. Car insurance laws are enforced at the state level. Forty-nine out of the 50 states in America require drivers to have an active car insurance policy at all times.
You may already know how car insurance works, but you may not understand the different types. Sadly, most insurance companies are focused on making profits. After a car accident, dealing with your insurer can be challenging without the help of car accident attorneys. Knowing and understanding the different types of insurance coverages will help you get the right policy for you. With the right policy, making claims after an accident will not be as hectic.
Types of Car Insurance Coverages
1. Liability Coverage
Liability coverage is mandatory in most US states to drive a car. Drivers are required to buy at least the minimum amount set by state law.
Liability coverage is divided into the following categories:
- Bodily injury liability: covers the other party’s injury if you are at fault, including medical expenses, lost wages, and pain and suffering. It also covers anyone else who is driving your car.
- Property damage liability: covers any damage that you may cause to another person’s property from the accident. It mostly covers vehicles, but it can cover other property like fences, mailboxes, buildings, or lamp posts. This cover does not cover damage to your property.
2. Collision Coverage
Collision coverage pays for repairing or replacing your car when your vehicle gets damaged in a collision. It can even cover potholes. This type of coverage is not mandatory, but your car’s leaseholder or lender may require it.
3. Comprehensive Coverage
Comprehensive insurance provides an extra level of coverage. It may help cover damage to your car from things like theft, hail, fire, or vandalism. Comprehensive coverage may help pay to repair or replace your car, up to the vehicle’s actual cash value.
4. Personal Injury Protection Insurance
Personal injury protection insurance is only available in some states. It covers certain medical expenses, loss of income, and funeral expenses resulting from a covered accident.
5. Uninsured and Underinsured Motorist Coverage
This type of coverage applies to your vehicle’s damages and your medical expenses. It is valid if another driver hits you and is uninsured or underinsured and their coverage (or lack thereof) cannot cater to pay for your damages. It also protects you and your car against uninsured drivers and hit-and-run accidents.
This coverage can also cover the policyholder if they are a pedestrian. Uninsured and underinsured motorist coverage can be mandatory or optional, depending on where you live.
6. Medical Payments Coverage
This cover pays for the treatment of injuries for you and any passengers in your vehicle at the time of an accident. It strictly pays for medical bills such as hospital visits, surgery, X-rays, and more.
Medical payment coverage has a limit per person. The limit is the highest amount of money the insurance company will pay you for medical costs. Before purchasing this coverage, ensure that you are aware of your limits.
7. Gap Insurance
At times car value depreciates very quickly. This coverage might be beneficial if you got your car through a loan. Sometimes insurance settlements may not be enough to cover a loan. With gap insurance, drivers can pay the amount owed on a car loan in case of total loss or theft.
Find the Best Coverage for You
You cannot predict the future, but you can protect yourself from what the future holds. Find out the minimum amount of liability coverage your state requires you to carry and shop around to get the best rates from your insurance provider.
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