The Different Types of Car Insurance Policies That Exist Today

by whatsmind

Did you know that more than twelve percent of drivers in the United States are uninsured? Driving without car insurance is illegal, dangerous, and potentially costly.

But if you go looking for car insurance, it is important to understand that there is not just one type of car insurance. In fact, there are several types of car insurance that consumers should know about.

Practically every state in the country requires motorists to have certain kinds of car insurance but insurance providers offer optional coverage as well. 

What’s a good type of insurance for one person might not be good for another. That is why we are here to help!

So if you would like to learn more then keep on reading and we will take you through the different types of car insurance that you need to know about! 

Liability Car Insurance

Liability car insurance covers other people’s vehicle repairs and medical bills after accidents that you cause. It doesn’t cover any expenses for your passengers or for you. 

Every single driver should have this kind of insurance. 

Collision Car Insurance

This kind of car insurance covers damage to your own car if you are part of an accident with a different vehicle. It also covers you if you get into a single-car accident or you hit a stationary object.

Drivers who are on a lease or have a car loan are going to be required to carry this kind of car insurance. You also should get collision car insurance if you are not able to afford to replace or repair your car if it is unexpectedly damaged. 

Comprehensive Car Insurance

Comprehensive car insurance covers damage to your own car. This is when the damage is caused by something other than an accident. This can include things like natural disasters and vandalism. 

You’ll need to get this kind of insurance if you have a lease or a car loan. You also will want to get it if you are not able to replace or repair your car if it is damaged unexpectedly.

Personal Injury Protection (PIP)

Personal injury protection (PIP) covers medical expenses for your passengers and yourself after an accident. Qualifying expenses might include traditional medical bills. They can also cover costs not usually covered by health insurance, such as a burial, lost income, and child care. 

There are several states where personal injury protection is required. Even if your state does not require this kind of car insurance, you should still get it if it is available and you are able to afford it. Personal injury protection can save you a lot of money in medical bills. 

Uninsured/Underinsured Motorist Coverage

This kind of car insurance covers car repairs and medical bills if you are in an accident that is caused by an uninsured driver. It also kicks in if you are in an accident caused by a motorist who does not have enough liability insurance to cover the expenses.

There are many states that require you to have this kind of insurance. You should also think about getting it if you don’t have overlapping types of insurance coverage. 

Medical Payments (MedPay) Coverage

Medical payments coverage deals with medical expenses related to accidents. This coverage applies to your passengers, your household members, you, and other policyholders. It can also sometimes cover the deductibles and copays of other insurance policies, including PIP and health insurance.

This type of coverage is similar to PIP but it has a narrower scope. 

This coverage is required in states like New Hampshire and Maine. If MedPay is available in your state, you should buy it to supplement current PIP and health insurance coverage. 

Gap Insurance

Everybody knows that cars depreciate over time. This depreciation starts the minute you drive the car off of the lot.

In a catastrophic loss, your car insurance provider is only going to pay your vehicle’s actual cash value. This could be less than what you own on the lease or loan. 

Gap insurance can pay for the dollar amount between what your car is worth and the balance of your financing.

Rental Reimbursement

While your vehicle is being repaired under a claim, rental reimbursement is going to keep you on the road. It does this by covering the cost of the rental vehicle.

There are limits on how much the insurance company will pay per claim and per day. However, it is typically enough to cover a rental for the amount of time that your car is in the shop.

SR-22 Insurance

An SR-22 isn’t a specific kind of insurance. Instead, it is a form that insurance companies file with the state in order to confirm that a risky driver is carrying the minimum amount of insurance required.

There are a small number of states that don’t require car insurance. If you live in one of those states and need to fill out an SR-22 form, you should consider getting non owners SR22.

The Importance of Knowing the Different Types of Car Insurance Policies That Exist Today

Hopefully, after reading the above article, you now understand the different types of insurance policies that exist today. As we can see, you have many options to choose from. This is why you need to see what your state’s requirements are and also what you are able to afford. 

And don’t forget to check out the rest of our site today for more helpful articles! 

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