Auto insurance is a requirement in most places, although the minimum liability coverage may vary. Numerous types of coverage are available to protect you from thousands of dollars in liability claims, auto repair costs, theft and medical expenses resulting from an accident. It can be confusing and overwhelming to determine the best coverage, so let's have a look in closer detail at the various options available for car insurance.
Liability Auto Insurance
Liability auto insurance at some level is required in all 50 states. Coverage protects you against claims from others as the result of an accident with your vehicle, as the expenses can be financially devastating if you are not covered. Expenses can include medical costs, property damage, funeral costs, lost wages, pain and suffering, repair costs to auto and legal costs.
There are 3 components to this vehicle insurance and they typically need to be purchased together:
- Bodily injury - a maximum payout for each person
- Bodily injury - a maximum payout for each accident
- Property Damage
Auto Collision Insurance
If your vehicle is damaged in a collision, collision auto insurance will cover the costs to repair or replace your car. Whether you should purchase this type of insurance coverage depends a great deal on the value of your car today. Since this type of insurance may be the most expensive part of your premium, it is worthwhile to determine if the age of your car and it's actual value is worth this added expense. Insurance will only cover up to the actual cash value of your car at the time of the accident. In addition, if your car is financed, the bank or finance company may required you to purchase collision vehicle insurance coverage. Choose the deductible amount that you are comfortable paying. Keep in mind that the higher the deductible, the lower the premium; however, you will pay more in the event of an accident.
Comprehensive Auto Insurance
Comprehensive auto insurance which is not mandatory will pay for damages to your vehicle which can be the result of anything other than a collision. This may include theft, vandalism, natural disasters, broken windshields or damage caused by animals. An important consideration here is that this type of insurance will only cover damages up to the value of your car at the time the damages took place. When you take together the deductible amount and the premium required, it may not be worth purchasing this kind of vehicle insurance.
Personal Injury Protection
If you can afford it, PIP car insurance is a great supplement when your health insurance plan won't cover costs as the result of an accident. If the accident results in you not being able to work, many expenses can arise and this kind of coverage will help ease the cost. Expenses can include lost income, child care expenses, medical expenses, funeral expenses or household expenses. This vehicle insurance may not be available in some states.
Underinsured/Uninsured Motorist Auto Insurance
There are two parts to this auto insurance coverage. If you are involved in an accident and the other driver is at fault and has no insurance, costs resulting from damages to your car or bodily injuries will be covered. If the other driver has auto insurance but the coverage isn't enough to cover your costs for damages or bodily injuries this coverage will pay for the difference. Coverage as part of your auto insurance is usually purchased equal to your bodily injury liability limit.
Medical Payments Coverage Supplement to Auto Insurance
Adding this coverage to your auto insurance will help pay for medical expenses resulting from an accident, regardless of which driver is at fault. This type of auto insurance can also cover other family members if they are driving or if they are struck by a vehicle while walking. If your regular health plan has a deductible, this vehicle insurance coverage may help to pay a portion of it or completely cover the cost. Expenses that can be covered include doctor visits, surgery, x-rays, ambulance fees and hospitalization.
Purchasing auto insurance can be stressful with so many options to choose from and each type of car insurance coverage will differ nationwide. Consult with a professional to help guide you in this endeavor.