Before shopping for car insurance, you must understand the different policies available. Depending on your state, some types of insurance are mandatory, while others are optional.

Car insurance protects you and your passengers. There are different types of insurance, and depending on where you live, there are numerous affordable options. With a basic understanding of the common types of insurance, you can purchase a solid insurance policy that suits your needs.

Liability Insurance

Auto liability insurance is mandatory in all states except Virginia and New Hampshire. It protects other road users in case of an accident by paying for any damages and injuries they may suffer up to your policy limits.

Drivers without liability insurance must cover damages such as medical bills and vehicle or property repairs out of pocket.

There are also fines and penalties for driving without insurance. Remember, when choosing your liability limit, your state’s minimum requirement will probably not be enough to cover injuries and damages in a severe collision. Always choose a higher limit to protect yourself.

There are two components of liability insurance:

Bodily Injury Liability

If you injure another road user in a collision, bodily injury liability protects you from financial loss.

For instance, a motorist who runs a red light and injures another road user can use liability coverage to pay for medical costs.Most states require all drivers to carry bodily injury liability insurance.

Property Damage Liability

In case of an accident, property damage liability covers the injured party’s property. This includes other cars, mailboxes, and fences.

For instance, if you cause an accident that damages your neighbor’s fence, your property damage liability coverage can pay for the repair costs.

Most states require all drivers to carry property damage liability insurance.

Uninsured/Underinsured Motorist Insurance

If you are hit by a driver who does not have car insurance or who does not have enough coverage, uninsured/underinsured coverage can help you pay for damages and injuries. There are three main categories under this insurance policy:

Uninsured Motorist Bodily Injury

If you are hit by a motorist who does not have insurance or a hit-and-run driver, uninsured motorist liability bodily injury coverage can help you pay medical bills.

Uninsured Motorist Property Damage

If an uninsured driver causes damage to your car, uninsured motorist property damage coverage can help you cover the repair costs.

Underinsured Motorist

Underinsured motorist coverage can help you cover the cost of medical bills if you are involved in an accident caused by a driver whose liability limits are not enough.

In some states, uninsured/underinsured motorist coverage is mandatory. We recommend checking your state’s minimum requirements.

Medical Payment Coverage

This type of car insurance can help you pay for medical expenses in case of an accident. In some cases, it can also cover the cost of rehabilitation.

While it is optional in most states, if you opt for medical payment coverage in one state, you can still use it if you are involved in an accident in a different state.

Medical payment coverage also covers the cost of medical bills for your passengers, even if you were at fault. It may also cover pedestrians involved in a car crash.

Personal Injury Protection

PIP can also help you cover the cost of medical bills in case of an accident. Also known as no-fault insurance, it covers losses from an accident, no matter which party is at fault.

Such losses include funeral costs, lost wages, and childcare expenses.Personal injury protection is optional in most states but mandatory in others.

Comprehensive Insurance

Comprehensive coverage can help you cover damages to your car caused by unexpected events such as fire, hail, theft, falling objects, or vandalism. This type of insurance typically helps you pay for repairs and replacement up to the car’s actual cash value.

You will have to pay a deductible which varies depending on your preference. A high deductible results in lower insurance premiums, while a low deductible means you pay more in insurance premiums.

Comprehensive insurance is optional in most states. However, if your car is leased or financed, your lender may require you to carry comprehensive insurance to protect their asset.

Collision Coverage

If you are involved in an accident where you hit an object or even another vehicle, collision insurance can help you cover the cost of damages.

For instance, if you hit a wall, collision coverage can help you cover the cost of damages to your car. It may also cover damages caused by a hit-and-run accident or your car rolling over.

This type of insurance is typically purchased alongside comprehensive insurance. While most states do not require you to carry it, your lender may require you to purchase this type of insurance.

Additional Types of Car Insurance

If you notice a gap in your insurance coverage, you can purchase additional insurance such as:

• Accident forgiveness coverage
• Gap insurance
• New car replacement insurance
• Rental reimbursement insurance
• Rideshare insurance.
• Roadside assistance insurance
• Personal umbrella insurance
• Car towing coverage
• Full glass coverage
• Sound system coverage
• Classic car insurance
• Full coverage insurance

Choosing the Right Insurance Coverage for Your Needs

Assess your financial situation to determine how much coverage you need. Experts recommend purchasing liability limits equal to your assets to protect your finances in case of a lawsuit.

If you do not have enough coverage, you might be forced to use your savings to cover accident-related medical bills and damages.

Another critical factor to consider is the cost of your car. Consider purchasing a collision cover if you cannot repair or replace it in case of an accident.

Consider purchasing comprehensive insurance if you live in an area with poor security and many car theft cases.

Summary

When it comes to insurance, every motorist has unique needs. Your auto insurance needs vary depending on where you live, how you drive, and your car. You must also choose the best type of car insurance to suit your budget.

Many online tools can help you compare car insurance costs in your area. You can also negotiate with your insurance provider to determine whether you are eligible for discounts. Whichever type of insurance you choose, you can drive safely, knowing that you are protected behind the wheel.

Contact your insurance provider to find out which types of car insurance are best for your needs.