Different Types of Car Insurance: Which One Suits You Best?
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The basic types of car insurance are liability, collision, comprehensive, and supplemental coverage.
On the surface, car insurance seems simple–you pay an insurance company, they help cover costs if you’re in an accident, and you’re set. However, there’s a lot more to auto insurance than that, as there are multiple types of car insurance coverage to choose from.
The bright side is that this means there are more options for you to find the perfect plan. The downside is that it can begin to feel a bit overwhelming when you’re shopping for coverage.
There are a few factors involved in choosing from the various types of car insurance: Where you live, how much you drive, and what your budget is. Knowing what's available can make it a lot easier to figure out what you should be looking for. Here are the different types of car insurance coverage available to you.
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Liability coverage is the most basic form of car insurance.
No matter what type of insurance you opt for, it will include liability insurance, which is required by law in every state except New Hampshire and Virginia.
Liability coverage covers the other driver's medical expenses and property damage if you are the responsible party in an accident. That's why it's the minimum required car insurance in most states. If you need car insurance and really can't afford a full coverage plan, you should get liability coverage.
Collision coverage is the car insurance that covers your vehicle if you’re involved in an accident. This applies whether you are in an accident involving another vehicle or you simply crash your car into a tree, telephone pole, or other inanimate object.
Collision coverage is especially important if you have a car that is worth enough that you wouldn’t be able to afford the repairs or to purchase a new vehicle if yours is totaled. If that's you, try getting a policy with collision coverage.
Comprehensive coverage takes care of your car should damage occur to it in non-collision situations.
For instance, if your car is vandalized, damaged by a storm, or damaged while being broken into, comprehensive coverage will kick in. It’s worth noting that if you hit an animal while driving, such as a deer, any damage that occurs falls under the umbrella of comprehensive coverage, not collision coverage.
If you live in a place where your car is at risk of being subjected to frequent damage, you’ll definitely want to consider comprehensive auto insurance. Even if you don't think your car will be susceptible to non-collision damage, it's a good idea to have comprehensive coverage, if you can afford it.
While liability, collision, and comprehensive coverages are the primary types of car insurance, there are a few supplemental packages that you can purchase to make sure that your auto insurance plan covers all of your needs.
- Uninsured/underinsured motorist coverage: This helps protect you in the event that you are involved in an accident with an uninsured or underinsured driver. If an uninsured or underinsured driver is responsible for the accident, this coverage makes sure that your medical expenses and vehicle repair costs are taken care of. In general, medical coverage is not necessary if you have health insurance.
- Personal Injury Protection (PIP) coverage: This is essentially a more comprehensive version of medical coverage. PIP covers not only the basic medical costs after an auto accident, but also any supplemental expenses such as funeral costs, rehab and physical therapy costs, and missed work costs.
With all these types of car insurance, there’s no question that you can find a package that is perfect for you, your car, your driving situation, and your wallet. Knowing what’s out there can help ensure that you end up with an ideal car insurance coverage plan.
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