Car insurance covers you for damage or loss to a car resulting from an accident. It does not cover any losses that occur from damage or theft of the vehicle itself, such as when the car is broken into and possessions are stolen. From a policy perspective, there are seven main types of car insurance, depending on the kind of car you own, the size of your policy and what kind of coverage you want.
1. Comprehensive coverage
The most common type of insurance available for a car is comprehensive coverage. This is designed to protect the car against accidents and damage in and out of its normal driving area, including in-car repairs. For example, if a vehicle has been stolen or vandalized, comprehensive coverage would pay for any damage incurred in repairing it to working order as well as payment for expenses of finding it again. It also protects against loss from vandalism and theft.
2. Collision coverage
Collision coverage typically covers the amount of damage or loss to your vehicle from an accident, such as when you hit a tree during a fender bender. This type of insurance is usually limited to two cars per person and may carry a deductible.
3. Property damage coverage
This type of car insurance covers expenses incurred repairing and replacing the damage, such as when your car is vandalized or stolen. For example, it would pay for repairs after someone breaks into your car and vandalizes it, but does not cover the cost of a new one. It will also pay for any theft from the vehicle you own, including rental vehicles if you have comprehensive coverage.
4. Personal injury protection
Personal injury protection helps cover the medical expenses of the driver, passengers and pedestrians in the event they are injured in an accident. It may also cover lost wages or other expenses during a period when it is necessary to take time off work.
5. Medical payments coverage
Unlike personal injury protection, medical payments insurance covers medical bills incurred by your family members and passengers who are injured in an accident. It may also be called Personal Injury Protection or PIP coverage. This policy often does not provide any benefits for you because it is typically limited to you family members and passengers.
6. Uninsured/Underinsured motorist coverage
This type of insurance protects you in the case that you are hit by a driver who does not have any insurance or is not financially capable of covering the damages. Uninsured/underinsured motorists coverage also protects you if you are hit while driving someone else’s car. It pays for personal injury, medical bills and lost wages if you are found at fault in an accident that was caused by someone who doesn’t have insurance or someone with too little insurance to pay for the damages. If you are an insured driver, this type of car would be included in your comprehensive policy.
7. Liability protection
Liability protection is basically the minimum required automobile insurance that every state requires a car owner to have. This type of insurance protects someone who is injured in an accident caused by a driver’s negligence or reckless driving by providing compensation or medical expenses beyond what is provided by their health insurance plan or government program. It pays up to $50,000 per person injured in an accident and $100,000 per accident. For example, if you hit a pedestrian with your car and their hospital bills are more than $50,000 or if they die from the injuries incurred from the accident (depending on the state), then your liability coverage pays for it.
Conclusion
Car insurance can be confusing because there are so many types of coverage available, and prices are not always equal on every policy. It is important to have enough insurance to cover the damage caused by an accident, but you should never pay for more than you need. If you choose to buy less coverage than what you should have and are involved in an accident, you may end up paying for the difference out of pocket or paying a deductible.