POPULAR TYPES OF CAR INSURANCE COVERAGE
A car insurance policy can protect you against financial losses if you’re involved in an accident that causes property damage, injuries or the death of another driver/person.
Automobile insurance policies consist of several types of coverage that covers different risks that could arise.
Some of these insurance policies are required by the laws of the state, while others are optional.
The popular types of automobile insurance coverage include:
a) Uninsured/Underinsured Motorist Coverage.
b) Property Damage Liability Insurance.
c) Comprehensive Coverage.
d) Bodily Injury Liability Insurance.
e) Collision Coverage.
f) Personal Injury Protection Insurance.
We shall now take a closer look and explore how each of them works.
1. Uninsured/Underinsured Motorist Coverage
This coverage is meant to protect you if you’re involved in an accident with a driver who’s at fault and doesn’t have sufficient insurance or no insurance at all.
2. Property Damage Liability Insurance (PD)
Property Damage Liability Insurance covers you in accidents where you’re deemed to be at fault. It pays for repairs on damages you’ve caused to the other driver’s vehicle or property.
3. Comprehensive Coverage
Comprehensive insurance coverage will reimburse you for any kind of risk factor associated with your vehicle, driver, passenger and property other than a collision. These risk factors covered by the insurance policy are theft, flood, damage by fire or weather damage. This type of insurance coverage can be bought as per your budget. You can decrease the insurance premium given by your insurer by installing anti-theft devices to your vehicle.
4. Bodily Injury Liability Insurance (BI)
A Bodily Injury Liability Insurance is meant to pay for the medical bills of the person you injured in an accident where you’re the cause of the incident. If the other driver dies, has an injury or damage to the property of the third party occurs, the liability insurance coverage will take care of the expenses.
As per the motor vehicle Act 1988, this is mandatory liability coverage.
5. Collision Coverage
This type of insurance policy covers damages to your own property or vehicle such as damage caused by hitting a stationary object like a pole or tree, as well as collision with other automobiles. In some cases, the insurance company will pay for the current market value of your car if the cost of repairs is above the current market value of your vehicle.
6. Personal Injury Protection Insurance (PIP)
Medical payment coverage can assist in paying any resulting medical bills, should in case you or a passenger in your vehicle are involved and injured in an accident. The insurance company will pay for the medical bills, regardless of whose fault it is. It can also cover funeral expenses if someone in your car dies due to an accident as well as lost wages if you or an injured passenger in your vehicle is unable to work.
Other Types of Car Insurance Coverage
You may be able to include other optional auto insurance coverage for yourself other than the mandatory insurance policies we listed above. This highly depends on the insurance company you’re using. The following are add-ons you can include as per your needs and requirements to get the maximum protection for your car:
a) Rental car reimbursement insurance.
b) Roadside assistance insurance.
c) Towing and labour insurance.
d) New car replacement coverage.
e) Gap insurance.
Different Insurance Coverage Requirements by State
Every state in the U.S except New Hampshire has made it compulsory to own both Property damage liability (PD) insurance and Bodily injury liability (BI) coverage. For drivers in New Hampshire, you have to meet a specific requirement of financial responsibility to forgo liability insurance coverage.
There are minimum coverage limits which are expressed by a sequence of numbers in your insurance policy. An example of this is if your insurance policy has a $15,000 BI limit per person, a $30,000 BI limit per accident, and a $15,000 PD limit, your policy would be shown as 15/30/15.
Keep in mind that minimum coverage limits are what they are called — minimums. Because you have the choice of buying insurance coverage above those limits.
Your legal status and/or requirements of carrying all these six mandatory insurance policies depends on the state you live in.
I Don’t Have a Car Insurance Coverage. What Then?
It’s against the law to own and drive a vehicle without insurance coverage, regardless of wherever you live in.
Certain things can happen if you drive your car without an insurance policy, and an accident occurs.
1) Based on the circumstances and the laws of your state, you could be charged with a driving violation and ticketed.
2) If you’re deemed to be at fault in the accident and caused physical injury or property damage to the third party driver, you could very well get a civil lawsuit. This could be financially devastating without insurance coverage to pay for damages.
Shopping For a Car Insurance Plan
You need to understand your vehicle requirements of insurance coverage before shopping for an auto insurance plan.
If you plan on purchasing a used car, you should examine the car through some important aspects. The market value of the car, the auto insurance premium and the extent of the insurance coverage.
If your car is in an unstable condition, you can choose to go for minimum coverage such as liability coverage.
You can repair the car at a cheap price instead of buying an expensive premium for an old car.
It is also a good idea to do your research on different companies and policies. Then do a comparison shopping on the quotes of all the different insurers you gathered.
Metromile, for example, is a save with pay per mile car insurance company that offers four different levels of liability protection as well as choices for your comprehensive and collision deductibles. You will never be penalized or have your rate increase purely because of an increase in annual miles.
