With all the auto-insurance options available, many drivers find themselves overwhelmed by the varying coverage types and levels. Though all U.S. drivers are required to carry car insurance, there are many coverage options beyond what the law requires. When you are looking at what kind auto insurance you want for your vehicles, it is crucial to evaluate the kinds of insurance in light of your financial situation. There are 5 main kinds of auto insurance that are available for drivers.
Liability Insurance
Liability insurance protects the insured if found liable for another’s property damage or medical bills. Most states require a minimum amount of liability coverage. The state minimums are often low in comparison to the damages from severe accidents, so it is advisable to carry more than the minimum, particularly for those with assets such as a house, which a court could sell to fund a settlement if insurance limits are too low. If you have nothing else, you should carry liability insurance.
Collision Coverage
Collision insurance covers the cost of repairing the insured’s vehicle. Unlike liability insurance, which covers other people’s property, collision coverage will pay for your car if you are at fault in the accident. It is not legally required unless the vehicle is financed. If a vehicle is paid off, it is advisable to have collision coverage unless the value of the vehicle is so low that the car would be considered totaled even though damages fail to meet or barely exceed the deductible.
Comprehensive Coverage
Comprehensive covers damage unrelated to an accident with another vehicle, such as auto theft, hitting a deer, or weather damage. Like collision coverage, comprehensive is advisable unless the value of the vehicle is very low in relation to the deductible. Also like collision coverage, financed vehicles must have comprehensive coverage.
Personal Injury Protection
If available, personal injury protection (PIP) covers medical bills for the insured and the insured’s passengers, regardless of fault. Medical bills for even minor accidents can be in the thousands and medical costs for major accidents can easily wipe out the assets of most Americans. PIP is a smart investment regardless of the vehicle’s value. You can also use it to cover lost wages or rehabilitation costs from the accident.
Uninsured or Underinsured Motorist Protection
Despite legal requirements, many uninsured motorists hit the road each day in America. If one of them is the cause of your accident, they won’t have insurance to pay for your car or your medical bills, and getting money from them will take a long time. Additionally, if you are the victim of a hit-and-run accident, you may not have the information of the person who hit you, so you can collect damages. According to Page Law, uninsured motorist protection is your best chance for getting the money that you need in a timely manner.
Once you understand the different types of insurance available, you will be able to make a more educated decision about what you need for your car. If your family has more than one vehicle, you can choose to insure different vehicles for different amounts with varying levels of coverage. It all depends on what you decide.