Understanding The Different Types Of Automobile Insurance

Posted on: 24 January 2024


Getting into a car accident is never something we plan, but it remains a possibility every time we get behind the wheel. That’s why car insurance is so important. In fact, having automobile insurance is required in most states in the country. But did you know that there are different types of automobile insurance? Understanding what each type covers and how it works will give you a better handle on how to protect your car and yourself. In this article, we’ll discuss the different types of car insurance available and what they cover.

Liability Coverage

Liability coverage is considered the most basic insurance coverage and, in most U.S. states, is mandatory. It is designed to cover damages to other drivers or property when you cause an accident. In the event of an accident where you are deemed at fault, liability coverage will help cover the medical expenses, property damage, and any legal fees that may arise from any injury or damage you may have caused. It is essential to note that liability coverage does not cover damage to your own vehicle.

Collision Coverage

Collision coverage will cover the cost of repairs or replacement for your vehicle in case of an accident, regardless of who is found responsible. While collision coverage is helpful in reducing the cost of repairs, it is not mandatory. However, if your vehicle is financed or leased, your lender may require you to carry this coverage.

Comprehensive Coverage

Comprehensive coverage takes care of non-collision incidents that may include theft, damage caused by natural disasters, or even fire. This type of coverage is not mandatory; however, it will provide an extra layer of protection for your vehicle, especially in areas prone to natural disasters or high levels of theft.

Personal Injury Protection (PIP)

PIP coverage is designed to cover the medical expenses of both you and your passengers if you get injured in an accident. PIP coverage will also cover such expenses as lost wages, rehabilitation, and even funeral costs.

Uninsured/Underinsured Motorist Coverage

In the event of an accident involving an uninsured or underinsured motorist, this coverage will come in handy. Uninsured/underinsured coverage will cover medical expenses, lost wages, and even property damage if the other driver's insurance does not cover the full cost of the accident. This type of coverage is optional, but it is good to have, considering that not all motorists carry insurance.

Contact an automobile insurance agent to learn more.