Auto insurance is essential for protecting yourself financially in the event of an accident. It can help pay for repairs to your vehicle, medical expenses for you and your passengers, and even lost wages if you’re unable to work due to an accident. In the United States, most states require drivers to have some form of auto insurance. Therefore, it is important to understand the types of auto insurance available and various protections offered.
Different Types of Auto Insurance
There are two main types of auto insurance: liability insurance and Comprehensive and Collision, which together are considered Full Coverage.
Liability insurance is the minimum amount of coverage you are required to have in most states. It covers the costs of property damage and bodily injury to others if you are at fault in an accident.
Full coverage insurance includes liability insurance, as well as comprehensive and collision insurance. This combination of insurance offers you the greatest protection in case of an accident. Comprehensive insurance covers damage to your vehicle that is caused by something other than a collision, such as theft, vandalism, fire, or hail. Collision insurance covers damage to your vehicle that is caused by a collision with another vehicle or object.
Other Coverage Types to Consider
In addition to liability and comprehensive insurance, there are a number of other types of auto insurance that you may want to consider.
Medical Payments Coverage
Medical payments insurance (MedPay) covers your medical expenses if you are injured in an accident. This type of insurance can be helpful if you require medical care after an accident and do not have health insurance or your health insurance does not cover all of your medical expenses.
Uninsured/Underinsured Coverage
Uninsured/underinsured coverage (UM/UIM) protects you if you are injured in an accident by an uninsured or underinsured driver. Uninsured drivers are those who do not have any auto insurance. Underinsured drivers have some auto insurance but not enough to cover the full cost of the accident.
UM/UIM coverage can pay for your medical expenses, lost wages, pain and suffering, and other damages if you are injured in an accident by an uninsured or underinsured driver. It can also pay for the funeral costs if you are killed in an accident.
Rental Reimbursement Insurance
Rental reimbursement insurance covers the cost of renting a car if your car is in the shop for repairs after an accident.
It is important to note that the coverage types mentioned above are not usually State required. However, they offer extra layers of protection and are good to have if you can afford them.
How to Choose the Right Auto Insurance
The type of insurance you need will depend on your individual circumstances and financial situation. If you have a low-value vehicle and few assets, liability insurance may be enough for you. However, if you have a high-value vehicle or a lot of assets, you may want to consider full coverage insurance.
The cost of auto insurance can vary depending on a number of factors. Your age, driving history, credit history, and the type of vehicle you drive can affect your insurance premiums. Therefore, it is always a good idea to shop around and compare quotes from different insurers before you buy auto insurance.
Even if you already have car insurance, it may be wise to get a new quote every six months to a year. Positive changes to your credit or driving history may result in reduced premiums.
