Types of Car Insurance

If you are car insurance shopping you already know what car insurance is and how it works, however, do you know there are several kinds of car insurance? These insurance types have several differences and knowledge of them will help you shop for car insurance.

Types of Car Insurance

In this article, we have put together several types of car insurance to help you make an informed choice as you shop for your car insurance to know the one tailored to meet your needs specifically.

Depending on the state you live in, some of the insurance types are mandatory for car owners and can be met with a penalty if otherwise, for other states some insurance types are optional.

Here is a basic guide to the types of car insurance, what they cover, and in what situation you may probably need them.

Types of Car Insurance

Below are the types of car insurance:

  • Liability Insurance
  • Personal injury protection
  • Medical payments coverage
  • Uninsured motorist coverage
  • Underinsured motorist coverage
  • Collision coverage
  • Comprehensive coverage

There are other insurance coverages, the above is more used and for the sake of this article, we will be talking about them alone. You can learn about each of the car insurance types below.

Liability Insurance

This liability insurance is usually required of drivers in most states, this means it is mandatory for car owners and they can be punished by the law if found without it.

Drivers are legally required to purchase this insurance coverage even if it is the minimum amount they can get as they will need the proof to legally drive a vehicle

This car insurance mostly covers the driver’s bills in the event of any situation that leads to damages, injuries, or even death.

There are two segments of liability insurance coverage and they are listed below:

  • Bodily injury liability- it helps to pay for the costs of damage, injuries, or death to another person if you are the cause or at fault in an accident.
  • Property Damage Liability – it helps to pay for the costs of damages you caused to another person’s property while you were driving such as their car, fences, buildings, or mailboxes.

The different types have different amounts which apply to the kind of accident and damage caused, however, if the property damage is higher than the amount the liability insurance covers, you will need to pay the extra amount.

Personal Injury Protection Insurance

This insurance is usually called no-fault insurance, it is available in a few states and helps to pay for your medical expenses after an accident irrespective of who was at fault.

PIP can also help cover other expenses incurred as a result of the accident when your source of income is lost such as childcare, funeral costs, and others.

This insurance is required in some states as a must-have, but it is not required in other states.

Medical Payments Coverage

This insurance is usually called MedPay, it is optional in some states but required in some other states as a must-have.

It covers the cost of all kinds of medical bills including surgeries, X-rays, and other visits to the hospital that are required as a result of an accident.

This insurance covers passengers and family members as long as the accident was caused by someone driving the insured vehicle irrespective of who is at fault.

It also covers the copays and deductibles of some other insurance policy; this insurance coverage is similar to PIP but it has a more limited scope.

Uninsured Motorist Coverage

This insurance pays for any expenses incurred from an accident with an uninsured driver. This insurance is required by some states.

According to the Insurance Research Council, in every 8 drivers at least one driver will be uninsured, and the probability of being hit by such drivers is high.

The insurance coverage helps drivers who become a victim of uninsured drivers by providing medical bills and repairs to their vehicles.

Underinsured Motorist Coverage

This insurance pays for any expenses incurred from an accident with an underinsured driver. An underinsured driver is someone whose insurance limits are very low.

When an accident happens with an underinsured driver and he is unable to pay some bills, the insurance company takes it up.

Below are some examples of underinsured coverages:

  • Uninsured motorist bodily injury coverage
  • Uninsured motorist property damage coverage

Collision Coverage

This insurance pays for damages done to your car irrespective of who was at fault. It goes further to cover damages to your car from hitting an object, a fence, a pole, a tree, a wall, or a pothole.

This insurance is optional and will not be required of you by the state you live in except your vehicle is financed or leased. They can also help with damages sustained from a rollover or hit-and-run accident.

Comprehensive coverage

This insurance will help with the damage done to your car by natural disasters like fire, hail, and others. they also help in cases of theft and vandalism by repairing or replacing your vehicle.

It is optional and will not be required of you by the state you reside in except your vehicle was leased or financed.

This insurance comes with a deductible which is an amount you will have to pay before your insurer pays for anything.


Which Type of Car Insurance is Required by Law?

There are car insurance coverages required by the law in every state, however, the type of car insurance required may differ.

Liability coverage for instance is mandatory in most states, the uninsured and underinsured, and MedPay coverage is required in some states while collision and comprehensive insurance is optional and only required if the car was leased or financed.

What is the Full Coverage Car Insurance

Full coverage car insurance is a term that refers to an insurance policy that includes insurance types like liability, collision, and comprehensive insurance.

Do I need Car Insurance If I use my car for work?

You may need to buy a commercial auto insurance policy if you use your car for business purposes such as groceries, goods, and restaurant takeout meals.

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