Types of auto insurance coverage to look out for
The most crucial thing you have to understand about auto insurance is that every policy is a combination of different coverage types. And certain types of insurance coverage have minimum state requirements for the policy to be valid. So before you start looking for a particular policy make sure to learn what the minimum requirements are in the state you car is registered in. You can check with your state insurance department or look online – there are a lot of lists concerning minimum requirements available on the web.
If you want to have a policy that will cover you from different risks, you certainly have to learn about auto insurance coverage types available on the market. These can be chosen to customize your policy and provide you protection in specific situations you want to be insured against.
Don't worry, though. There aren't too many elements to confuse you. In fact, there are only six basic elements of a typical auto insurance policy:
• Bodily Injury Liability: This type of insurance coverage is required in all states. It pays for the injuries you have inflicted to the other party.
• Property Damage Liability: Like Bodily Injury, this type of coverage is also required legally in most states. It pays for the damages you have delivered to the third party's property (car, property, infrastructure, etc.)
• Personal Injury Protection: This type of auto insurance coverage pays for the medical costs due to injuries inflicted to you or your passengers no matter who was at fault in the accident.
• Collision Coverage: This is an optional coverage type and it pays for the damage delivered to your car in the course of a collision with another vehicle or element of infrastructure.
• Comprehensive Coverage: Often bundled with Collision Coverage, it also pays for the damages to your car, but deals with everything outside collisions: fire, wind, storm, vandalism, explosions, etc.
• Uninsured Motorist Coverage: This coverage type is crucial when ending up in an accident with a driver who doesn't have enough insurance coverage (or any at all) to cover your damages or injury.
There are also additional coverage options that you can purchase as add-ons to your basic policy. Some of the most common add-ons include:
• Rental Reimbursement Coverage: This raider will pay for rental costs while your car is being repaired at the shop.
• Towing and Labor Coverage: This coverage option is particularly helpful when you need towing while on the road.
• Gap Auto Insurance Coverage: This coverage type is also known as “Umbrella” and is used to cover the difference between the remaining auto loan amount and its actual cash value in case the car gets destroyed in an accident.