When it comes to car insurance, there are several types of coverage available. Depending on where you live, some of these coverages may be mandatory while others are optional. Understanding the types of coverage available and knowing what you may need most can be an important step before finalizing your policy. After all, drivers in the U.
S. spend, on average, about 2.57% of their annual income on auto insurance, so choosing the right coverage can be key to getting the most value out of your policy. The four main types of car insurance coverage are personal injury liability, property damage liability, comprehensive and collision coverage, and uninsured or underinsured motorist coverage. Personal injury liability covers the other party's injuries if you are at fault in an accident, including medical expenses, lost wages, and pain and suffering. Property damage liability covers any damage you may cause to another person's property as a result of a car accident.
Comprehensive and collision coverage is designed to cover damage to your own vehicle. Uninsured or underinsured motorist coverage pays for damages if you are hit by an underinsured or uninsured motorist. Personal injury liability is required in most states and usually has a minimum requirement for the amount of coverage you must have. Property damage liability is also required in most states and has a minimum requirement for the amount of coverage you must have. Comprehensive and collision coverage is optional but can provide additional protection for your vehicle if it is damaged in an accident.
Uninsured or underinsured motorist coverage may be optional or mandatory depending on your state's regulations. In addition to these four main types of car insurance coverage, there are also other types of optional coverage that can be used to improve your policy or provide you with more financial protection in the event of accidents and other related incidents. These include medical payments coverage, personal property coverage, gap insurance, and rental car reimbursement. Medical payments coverage covers your medical expenses if you are hit by another driver but don't have enough liability coverage to pay for your injuries. Personal property coverage covers personal property that you may have inside your vehicle such as a laptop or household contents. Gap insurance covers the difference between the depreciated value of your vehicle and the amount of your loan.
Rental car reimbursement covers the cost of renting a car while yours is being repaired after an accident. Choosing the right car insurance policy can be a daunting task but understanding the different types of coverage available can help make it easier. Knowing what type of coverage you need and how much coverage you should have can help ensure that you get the most value out of your policy.
