Understanding the Different Types of Car Insurance

By Andrea Nicole

Posted on Jun 19, 2020


Source: Pexels


Understanding the Different Types of Car Insurance

Most people treasure their cars a lot. The reason behind this is because acquiring a car is not that easy. With skyrocketing prices of automobiles, many people could not afford to buy one right away. That’s why when they finally got one, they treat it as one of their prized possessions and they make sure that they have car insurance to cover for any damages.

Moreover, some states also require car owners to have car insurance. Also, you cannot enter an agreement with lenders or car loan financers when you don’t have it. However, you should also know that there are different types of car insurance and this article aims to distinguish the differences between those.


Liability Insurance


Source: Pexels


Having car liability coverage is mandated by most states in the US. Legally speaking, drivers are required to avail at least the minimum amount of auto liability coverage that is set by state law. Moreover, you should also know that there are two components to car liability coverage. These two are the following:

  • Bodily Injury Liability- when you caused an accident to someone, it may help on covering the cost of that person’s injuries
  • Property Damage Liability- it helps cover the cost of the damage that you caused on someone else’s property


Uninsured and Underinsured Motorist Coverage

The uninsured motorist coverage will help you pay for your medication costs if you are hit by a driver who does not have insurance. In some states, this also includes paying for the repairs of your vehicle.

On the other hand, if you got into an accident with an underinsured driver, that means that they are covered by car insurance but the liability limits are not enough to cover your medical bills. This is the reason why the underinsured motorist coverage may come handy.

Comprehensive Coverage

This type of car insurance will help cover damage to your car that is a result of theft, fire, hail, or vandalism. Moreover, if your car is damaged by a covered peril, comprehensive car coverage will help replace your vehicle. However, the value of the new car that they will give you will only be up to the value of your current car.

Collision Coverage

This is the type of coverage that is usually required by lenders. The reason behind this is because the collision coverage may help pay the repair or replacement of your car when you accidentally hit onto something.

Personal Injury Protection (PIP)

The Personal Injury Protection or PIP will cover your medical bills if you get into an accident while driving your car. Moreover, this type of coverage can also cover the events that happened before the accident, such as child care expenses or lost income.

Medical Payments Coverage

This type of coverage will cover you and anyone else that you are riding with if you get into an accident. This pays for medical visits and x-rays.

Understanding these different types of car coverage is essential for your safety. I hope that you are able to understand the ins and outs of each by reading this article!

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