Six types of Car Insurance Coverage

An automobile insurance policy can protect you against financial losses if you’re involved in an incident. Automobile policies consist of various kinds of coverage, often six in total. Depending on the state where you live, some of these coverages may be mandatory, while others will be optional.

KEY TAKEAWAYS

  • Automobile insurance can protect you financially if you’re involved in an accident that results in property damage, injuries, or even the death of somebody else.
  • Automobile insurance policies include of different sorts of policy that cover various dangers.
  • Some sorts of automobile insurance coverage are required by state law, while others are optional.
  • There are other sorts of optional coverage you may want to consider.

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Six Types of Car Insurance Coverage, Explained

The six major types of car insurance coverage are:

  • Bodily Injury Liability (BI)
  • Property Damage Liability (PD)
  • Medial Payments or Personal Injury Protection (PIP)
  • Collision
  • Comprehensive
  • Underinsured/Uninsured Motorist
 This is a closer look at how each one works.

Bodily Injury Liability Insurance (BI)

Bodily injury liability insurance is intended to pay medical expenses for someone else at case you injure them in an accident where you’re deemed to be responsible. This coverage can apply to you and to anyone else listed as a driver on your policy.1 2

Property Damage Liability Insurance (PD)

Property damage liability insurance also covers you in accidents where you are to blame. It pays for repairs to some other motorist’s vehicle or other property you may damage.3

Medical Payments or Personal Injury Protection Insurance (PIP)

In the event you or a passenger in your automobile are hurt in an accident, medical payments or personal injury protection policy might help insure any resulting medical bills. This type of coverage can also cover lost wages if you or an injured passenger cannot operate or funeral expenses if someone on your automobile dies because of an collision.3

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Collision Coverage

While property damage liability insurance pays for damage to someone else’s vehicle or property following an accident, collision coverage pays for damage to your own vehicle or property. That could include damages caused by a collision with another car or hitting a stationary object, like a tree or fence.3

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Comprehensive Coverage

In depth coverage reimburses you for loss, theft, or damage to your automobile caused by something other than a collision. For example, that may include fire damage, damage from hail and other falling objects, or damage from creatures.3

Underinsured/Uninsured Motorist Coverage

Underinsured motorist coverage can protect you once you’re involved in an accident in which the driver who’s at fault doesn’t have enough insurance. Uninsured motorist coverage is supposed to protect you once you’re in an accident with a driver who has no insurance at all.3

If you’re financing a vehicle, your lender may need you take out collision or comprehensive coverage and keep it until the loan is repaid.

How Insurance Coverage Requirements Vary by State

Every state but New Hampshire requires you to have both bodily injury liability and property damage liability coverage. (New Hampshire drivers do need to meet certain financial responsibility requirements to forgo liability policy ) 4

In the remaining states, there are also minimal dollar amounts to the policy you need to carry. Bodily injury liability could have two dollar limits: one per person and another per accident, regardless of the fact that there is just 1 limit for property damage.5

Coverage limits are usually expressed in your insurance coverage with a sequence of numbers. So, by means of example, if your policy has a $25,000 bodily injury liability limit per individual, a $50,000 bodily injury liability limit per accident, and a $25,000 property damage liability limit, your policy would say it as 25/50/25.

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It’s important to not forget that the minimum coverage limits are just that–minimums. You may elect to purchase policy over these constraints, which is often a smart idea.

Whether you’re legally required to take medical payments/PIP insurance, collision coverage, comprehensive coverage, or underinsured/uninsured motorist coverage depends upon your state. And again, the minimum coverage amounts you’re required to have for every one can change.

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Other Sorts of Optional Car Insurance Coverage

Depending on the insurance carrier, you may be able to add other sorts of auto insurance for your policy aside from the six listed above.

For example, that might include:

  • Roadside assistance insurance
  • New Vehicle replacement coverage
  • Gap insurance
  • Towing and labor insurance
  • Rental car reimbursement insurance

Furthermore, there are situations that may require specialty insurance plan. By means of instance, for people that have a classic or antique car that you may need an insurance plan which takes the car’s age, values, and how often you push it into account. You may also purchase specialty coverage for a car that you leave in storage or if you use your vehicle to supply ride-sharing services.

What Happens if You Don’t Have Auto Insurance?

No matter where you live, it’s against the law to drive an automobile without automobile insurance (or meeting financial responsibility requirements, in the case of New Hampshire. Financial responsibility laws require that you furnish proof that you have the ability to pay damages if you’re involved in an accident.) 6

If you drive without insurance and an accident occurs, several things can happen. To start with, you could be ticketed and/or charged with a driving violation, according to the laws in your state and determined by the conditions of this collision. At a minimum, you have your driver’s license suspended or revoked.6

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Furthermore, you might face a civil lawsuit if you’re responsible for the crash and cause bodily harm or property damage. With no insurance coverage to cover damages, you could be held financially responsible for covering somebody’s medical bills and/or for repairs to their vehicle. Depending upon the extent of their injuries or the property damage, which might be financially devastating.6

Shopping for Auto Insurance

If you would like auto insurance, it pays to research different companies and policies. Then get quotes from several insurers. Pay particular attention to the policies’ premiums and deductibles so you can make a fair cost comparison.

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