Type of Auto Insurance

Auto insurance is a mandatory requirement in many countries. There are different types of auto insurance policies that car owners can purchase. This article will cover the different types of auto insurance policies available to car owners.

Liability Insurance

Liability insurance is a mandatory requirement in most states in the US. This type of insurance provides coverage for damages or injuries that you may cause to another person or their property while driving your car. Liability insurance does not provide coverage for your own vehicle or injuries sustained by you or your passengers. There are two types of liability insurance:

Bodily Injury Liability

Bodily injury liability covers injuries to other people caused by your vehicle. This type of coverage pays for medical expenses, lost wages, pain and suffering, and other related expenses.

In some states, auto insurance policies may have split limits for bodily injury liability coverage. For example, a policy may have a limit of $100,000 for bodily injury liability per person and $300,000 per accident.

Property Damage Liability

Property damage liability covers damage caused to other people’s property by your vehicle. This includes damage to vehicles, buildings, fences, and other property. This type of coverage typically has a limit, which can vary depending on the policy.

Collision Insurance

Collision insurance provides coverage for damages to your vehicle caused by a collision with another vehicle or object. This type of coverage is optional, but it is recommended for those who have a newer car or a car that is financed. Collision insurance typically has a deductible, which is the amount you must pay out of pocket before the insurance coverage kicks in.

Comprehensive Insurance

Comprehensive insurance provides coverage for damages to your vehicle caused by events other than a collision. This includes theft, vandalism, fire, and natural disasters. Comprehensive insurance is also optional, but it is recommended for those who have a newer car or a car that is financed. This type of coverage usually has a deductible as well.

Uninsured/Underinsured Motorist Coverage

Uninsured/underinsured motorist coverage provides coverage for damages or injuries that you may sustain in an accident caused by someone who does not have insurance or does not have enough insurance to cover the damages. This type of coverage is mandatory in some states, but it is optional in others.

Personal Injury Protection

Personal injury protection (PIP) provides coverage for medical expenses and lost wages that you may incur as a result of an accident, regardless of who was at fault. This type of coverage is mandatory in some states, but it is optional in others. PIP typically has a limit, which can vary depending on the policy.

FAQ

What is the difference between liability and collision insurance?

Liability insurance covers damages or injuries that you may cause to other people or their property while driving your vehicle, while collision insurance covers damages to your own vehicle caused by a collision with another vehicle or object.

Do I need comprehensive insurance?

Comprehensive insurance is optional, but it is recommended for those who have a newer car or a car that is financed. It provides coverage for damages to your vehicle caused by events other than a collision, such as theft, vandalism, fire, and natural disasters.

Is uninsured/underinsured motorist coverage mandatory?

Uninsured/underinsured motorist coverage is mandatory in some states, but it is optional in others. This type of coverage provides coverage for damages or injuries that you may sustain in an accident caused by someone who does not have insurance or does not have enough insurance to cover the damages.

What is personal injury protection?

Personal injury protection (PIP) provides coverage for medical expenses and lost wages that you may incur as a result of an accident, regardless of who was at fault. This type of coverage is mandatory in some states, but it is optional in others. PIP typically has a limit, which can vary depending on the policy.

What is a deductible?

A deductible is the amount that you must pay out of pocket before the insurance coverage kicks in. For example, if you have a collision insurance policy with a $500 deductible and you get into an accident that causes $2,000 in damages, you would have to pay the first $500 and the insurance company would pay the remaining $1,500.