When it comes to an auto insurance policy, there are actually many different components. Aside from the standard liability coverage, there are types of auto insurance that cover medical payments, theft, and vandalism. It sounds complicated, but all of these options exist for your benefit and not all of them are a required part of your auto insurance policy. Keep this in mind when shopping for auto insurance.
Types of Auto Insurance
In the event that you are found at fault in an accident, liability insurance will pay for the property damage and medical expenses of the other driver. Liability coverage is the foundation of most auto insurance policies, and it is required in pretty much every state.
You’re required by law to have a minimum amount of liability coverage. This amount will vary state-by-state, but it’s always a good idea to purchase more than the minimum amount because any damages that exceed your coverage limit will need to be paid out of pocket.
Uninsured or Underinsured Driver Coverage
Not everyone is a perfect, law-abiding citizen who purchases liability coverage, and that’s where uninsured driver coverage comes into play. This coverage will help pay for your injuries in the event that you get into an accident with an uninsured or underinsured (that guy who only got the minimum amount of liability coverage) and they are found at fault.
You might be asking how common it is to run into uninsured drivers. Nationally the number is around 12%, which might already be higher than you were expecting. In Florida, the number is a staggering 23.8%. Looking at numbers like these, it’s clear that coverage against uninsured drivers is a smart buy if you want to be fully covered.
Medical coverage is exactly what it sounds like. If you or someone in your vehicle is injured in an accident, medical coverage helps pay for required medical treatments. This coverage will kick in regardless of who is at fault, so it’s a good thing to have in your auto insurance policy.
Another kind of medical coverage is Personal Injury Protection. PIP is actually a little more comprehensive than standard medical coverage, paying for the ancillary costs of an injury like lost income or child care.
Comprehensive coverage insures you against things that aren’t accident related, such as natural disaster, theft, or vandalism. It will pay for repair costs up to the market value of the vehicle. Comprehensive coverage is a good idea if you live in areas prone to inclement weather (tornadoes, hailstorms, hurricanes) and you will be required to purchase it when leasing or financing a car.
Collision coverage is exactly what it sounds like, coverage against collisions. This could be a collision with another vehicle or even stationary objects like fences or signposts. This is another one of the types of auto insurance that are typically optional but may be required by your lender when purchasing or leasing a car.
Now that you are aware of the different types of insurance, think carefully about your driving habits, automobile, and financial situation to determine the best coverage for you. Auto insurance was designed to cover medical expenses and the damage done to your vehicle in the event of an accident. Will the coverage you are considering provide the compensation you need when you need it most, without placing undue financial burden on you? If so, it may be the best policy for your needs.
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