6 Different Types of Auto Insurance Coverage for You to Consider

There are 6 different types of auto insurance coverage for you to consider. You can select all of them for a powerful policy or choose just a few for a more compact plan. Some are mandatory, while others are optional.

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Just about every car insurance provider offers a multitude of coverage levels that appeal to all drivers. The key is to find just the right kind that will keep you safe without emptying your wallet. Luckily, when you review the top choices, the difficult decisions will become much easier.

Before you start looking around for the right company, you should familiarize yourself with their services. After all, you may wind up going online to complete the process and you will not have much assistance.

However, if you dig deep and investigate properly, you might be able to save some money and get a great policy too. All you need to do is schedule the time in your busy day to begin.

Liability Bodily Injury/Property Damage Protection

Liability auto insurance is not a consideration; it is a requirement in all states. In accordance with the state laws across the nation, this is the least amount of coverage you can purchase if you operate a motor vehicle. The amounts vary, however, and this is when most people begin to question limits and prices.

The good news is you can find out how much you must purchase by going to your state representative’s office, called the Department of Insurance. This takes the guesswork out of the process and prevents you from relying on any car insurance company for the answers.

Understanding the way this level of coverage works is very basic. In essence, your state separates the amounts in three categories. They appear split on most car insurance applications according to the payment amounts.

For example, if you live in South Carolina you would see this 25/50/25, which stands for $25,000/$50,000/$25,000.The dollar value amounts represent what the car insurance company pays in the event of a collision.

The first two numbers go towards expenses for the victim or victims of the accident, and the driver for injuries. The last number applies to damages. However, unlike medical coverage, the at-fault driver does not receive compensation for their property. This is why the name of this coverage is liability. It prevents you from being liable or responsible for others.

$25,000 pays for injuries for everyone involved and $50,000 is for each incident. The lowest amount, which is $25,000, pays for property, usually the other car. In some instances, however, it could be a home, store, or even a telephone pole.

Since some injuries can be extensive and property is costly, you may want to increase your limits beyond the required amount.

If you do not have enough coverage to repair someone’s property or pay for medical bills, the balance comes from you. Your insurance company only pays up to the amount you select.

Collision

Collision car insurance is not mandatory, but it is certainly worth looking into when you review the latest numbers from the Collaborative on Health and the Environment (CHE-NW), which represents the Northwestern region of the United States.

Their report for Washington State uncovers some surprising data concerning the amount of money motor vehicle collisions cost them over a 10-year period. According to their research, they spent over $38 billion between six different counties. If you multiply this number by the remaining states, the amount easily reaches hundreds of billions of dollars.

Collision coverage is very different from liability because it protects the driver of the vehicle, even if it was you who caused the accident. If you crash into another vehicle, collision pays to repair your car when you file a claim. You must select a deductible before your car insurance company picks up the tab, however.

The amounts usually begin at $250 and can go as high as $1,500. Most customers choose a number somewhere in between, around $750 to $1,000. It is better to base your deductible on the worth of the vehicle, since this is how your car insurance company operates.

When you need repairs, the car insurance company uses their claims adjuster to determine the costs. Based on their report, the auto insurance provider settles the issue and pays the auto body shop you select. They work the same way if your car has damage beyond repair with one twist.

Although your car may cost $25,000 to $50,000, you will not see this amount if you have an accident.

They use the blue book value and in accordance with these numbers, this is how they determine how much to pay you; if your car value is only $10,000, this is the amount of the check they send.

Comprehensive

Comprehensive coverage is useful because it helps when something happens to your car, regardless if you are inside or not. It is not for accidents, but rather for unforeseen situations that cause damage.

For instance, comprehensive pays for claims due to theft of your vehicle. It differs from GAP insurance, which is generally for newer cars. Comprehensive is for all motor vehicles no matter how old.

Comprehensive is also good for water damage, fire, hail or vandalism. It works when a tree falls onto your rooftop as well as when a shopping cart goes flying on a windy day. Anytime damage occurs, that is not because of a collision; you can file a comprehensive claim and receive payment.

Uninsured/Underinsured Motorist Protection

Many states require uninsured/underinsured motorist protection, but it is not yet mandatory nationwide. It is still a good idea to purchase this type of car insurance coverage because the numbers of people without insurance is growing daily.

In addition to those who blatantly disobey the law by not providing car insurance, there are those who simply do not have enough; they fall under the underinsured motorist category. These drivers often commit the worst type of offenses, like a hit and run. Because they know they caused the accident and their car insurance will not cover the damages, they run away.

Unless you want to spend time waiting on a claim to pass through the arbitration process, you should at least look into the cost. Depending on your state, you may be able to find a decent amount of protection for very little extra each year. It is certainly better than worrying about when your car is going to get fixed.

Guaranteed Auto Protection

Guaranteed auto protection is usually for new vehicles that have loan or lease agreements. If your car insurance company writes off the damage as a loss, you receive a pass on your payments to the finance company or bank. Instead of having to make your monthly obligations, this insurance allows you to cease.

However, just like other levels of coverage, you need to check the particulars with your state. For instance, residents of the state of Indiana have very specific guidelines when it comes to GAP insurance.

In terms of cost and coverage there are two ways you can pay for GAP protection, in your monthly payments to the finance company or directly to the insurance company.

If your finance company requires GAP insurance before they accept you as a customer, they cannot include the charge as an extra payment. They must allow the cost to be incorporated into the finance charge associated with the loan.

If you choose GAP insurance through an independent car insurance company, they can opt to include this in your collision coverage and increase your rates by 10% to 25% to compensate for the risk. They can also charge a standard fee each year anywhere from $15 to $25 each year.

Personal Injury Protection or Med Pay

Personal injury protection and Med Pay are both the results of the tort laws in certain states. If you live in a no-fault state, personal injury protection is something you need.

These states include New York, New Jersey, Colorado, Kansas, Hawaii, Florida, Massachusetts, Minnesota, Michigan, Pennsylvania, North Dakota, and Utah. They use the limited tort option and cannot seek damages beyond a specific amount.

New Jersey is one of the states with the longest history of no-fault auto insurance laws. If you reside in this state, you are familiar with PIP and the advantages.

For example, this level of coverage protects you if you have severe injuries from a car accident. You receive compensation for emergency room expenses, x-rays and more. You also recoup losses from lost wages if you are away from your job for a while.

On the negative side, PIP has limits. You cannot find a car insurance policy that does not have a threshold. This means you must select an amount or cap for your medical expenses and income losses. Most policies in no-fault states with PIP extend the dollar value to $500,000. If you need more than this amount, you can seek legal options.

MedPay coverage is also for no-fault states, but it applies to those without limited tort, or the right to sue. You can utilize MedPay coverage for everything PIP covers as well as long-term care including physical therapy, rehabilitation, dental treatments and more.

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