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Auto Insurance
Auto Insurance Basics
Understanding Auto Insurance
Best California Auto Insurance
Popular Auto Insurance Companies
Colorado Auto Insurance Quote
Get Auto Insurance Quotes With 10 Simple Steps
7 Considerations When Buying Commercial Auto Insurance
Cheap Auto Insurance for Your Cars
How Much Does Auto Insurance Really Cost?
How to Find Cheap Auto Insurance
Types of Auto Insurance Coverage
A basic auto insurance policy usually includes six types of coverage. They provide the broadest protection for the most common events for which you would file a claim. In addition to those six basic types, there are several others that apply to very specific events that may cause damage to your vehicle, or to specific needs you may have if you're involved in an accident. Most of these coverages are optional, and adding them to your policy will increase your premium. Depending on the situations you encounter, having the right kind of coverage at the right time can save you a lot of stress and financial loss.
Liability Coverage
Liability insurance does not cover any expenses related to damage to your property, or any injuries you may suffer. It exists to pay for those things suffered by the other parties in an accident for which you are found to be at fault. All states require a minimum amount of liability coverage in order to legally drive a vehicle. In some states, you can avoid buying liability coverage if you can prove you have the personal financial resources to cover the minimum requirements levied by the state. Liability insurance covers you when driving any vehicle you own, or if you drive someone else's car with their permission.
Property Damage Liability
Property damage liability does not cover damage to your own property. It kicks in when you are found at fault in an accident, and your vehicle has damaged someone else's property. There are varying degrees of this type of coverage that will determine exactly what damages are covered. You will choose the amount of coverage when you buy the policy, and there may also be state-imposed minimums, especially if your vehicle is financed. The amount of coverage selected will determine the premium you pay for it. Property damage liability may include a deductible. Having this type of coverage protects you from paying out of pocket if you are found at fault for damage to anyone else's property.
Bodily Injury Liability
If you are found at fault in an accident that resulted in injury to another party, bodily injury liability coverage comes into play. It does not cover your own injuries, or those of any other driver included on your insurance policy. This coverage usually pays for: medical bills; physical therapy or rehabilitation; work time lost due to injury; legal representation for the other party; funeral costs; and possibly “pain and suffering,” which is determined by a court in the event of emotional or physical stress resulting from the accident. This is an important coverage to add to your policy. Medical expenses can skyrocket and cause tremendous financial hardship if you have to pay for them out of pocket.
Comprehensive Coverage
True to its name, comprehensive coverage applies to almost any type of loss that may occur, but not as a result of an auto accident. This can mean damage from severe weather such as tornadoes, hurricanes, or hail storms, or natural disasters such as earthquake, flood, or fire. It also applies if you hit an animal, or if your vehicle is vandalized or stolen. Even in the unlikely event that something falls on your car and damages it, comprehensive coverage will pay for the repairs. It's a good idea to pair comprehensive coverage with another type of coverage like collision to cover damage that does result from an accident.
Collision Coverage
Collision coverage is exactly what the name implies. It applies when your vehicle is involved in any kind of collision, whether it's with another vehicle, a building, a guardrail, or any other stationary object. In some cases, it also covers damage caused by the vehicle flipping over, or running over potholes. Collision coverage will pay for the repairs your vehicle needs after any of these incidents, or to replace your car altogether if the collision causes a total loss, also known as “totaling” the car. The most important thing to remember in this case is, you will be reimbursed for the current value of the vehicle, not the purchase price.
Fire and Theft Coverage
As the name states, this type of coverage applies when your vehicle is damaged or totaled as a result of fire, or if your car is stolen. If your car catches fire due to lightning or an explosion, this coverage will pay to repair or replace your vehicle. It also offers very specific coverage to include damaged resulting from the sinking, collision, derailment, burning, or stranding of a trailer that is transporting your car. It also offers some redundancies in coverage for things like floods, earthquakes, hail or wind damage, vandalism, or accidents caused by hitting an animal. It may also pay for damages resulting from an accident involving an uninsured driver, provided you are not at fault.