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What do all the different types of car insurance packages mean?
I'm buying car insurance for the first time and I have no idea what to buy. I drive a 2008 Nissan Xterra that has no money owed on it. What insurance do I need and what does all of it mean?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“Here is a basic rundown of common coverage types:
- Liability coveragepays for damage to other vehicles and other people’s medical bills when you’re at fault in an accident.
- Collision coveragepays for damage to your car in a collision, regardless of fault.
- Comprehensive coveragepays for damage to your vehicle that wasn’t the result of a collision.
- Uninsured/underinsured motorist coveragepays for your medical bills and property damage if you’re hit by a person without insurance or with low-limit coverage.
- Personal injury protection (PIP) pays for your medical bills and lost wages after a car accident.
There are a few other types of coverage you can choose, but these are the most important.
Now that you know what they are, here’s where you need to choose.
Liability coverage is legally required in most states. Just try to avoid buying the state-minimum coverage, as it may not fully cover you in the event of an accident. PIP is also required in 13 states.
If you can’t afford to pay for damage to your car, but you can afford the monthly payment, include collision and comprehensive coverage in your policy.
Uninsured/underinsured motorist coverage is also nice to have in case another driver hits you and they can’t cover your costs.”
View full answer
- Gregory R.
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