Typical Components Of An Auto Insurance Policy

If you are buying a new car or looking for car insurance, you may need to understand the common types of insurance provided in a car insurance policy. If you are in a car accident, you can use various types of car insurance to help protect you, your passengers, and your vehicle.

The six common car insurance options are: auto liability insurance, uninsured or underinsured motorist insurance, comprehensive insurance, collision insurance, medical payment insurance, and personal injury insurance. Depending on where you live, some of these insurances are mandatory and some are optional. Knowing the requirements of your state and each coverage can help you choose the coverage that suits your situation.

 

  1. LIABILITY COVERAGE

In most states, auto liability insurance is mandatory. The law requires drivers to purchase at least the minimum liability insurance required by state law. Liability insurance has two components:

  • Bodily injury liability: If you cause an accident, you can help pay for expenses related to the injury of others.
  • Property damage liability: It can help compensate you for damage to other people’s property while driving.

 

  1. UNINSURED AND UNDERINSURED MOTORIST COVERAGE

If you are hit by an uninsured driver, uninsured motorist insurance can help pay for your medical expenses or, in some states, your vehicle repair costs. If you are hit by an underinsured driver, it means that you have car insurance, but your liability limit is not enough to cover the medical expenses incurred. This is where underinsured motorist insurance can help. Some states require uninsured or underinsured motorists to insure, while in other states it is optional.

 

  1. COMPREHENSIVE COVERAGE

If you are hit by an uninsured driver, uninsured motorist insurance can help pay for your medical expenses or, in some states, your vehicle repair costs. If you are hit by an underinsured driver, it means that you have car insurance, but your liability limit is not enough to cover the medical expenses incurred. This is where underinsured motorist insurance can help. Some states require uninsured or underinsured motorists to insure, while in other states it is optional.

 

  1. COLLISION COVERAGE

If you have an accident with another car, or if you hit an object such as a fence, collision insurance can help you pay for car repairs or replacements (up to its actual cash value minus your deductible). Usually optional. However, the tenant or lender of your vehicle may require this.

 

  1. MEDICAL PAYMENTS COVERAGE

If you, your passengers, or a family member driving an insured vehicle are injured in an accident, medical insurance can help pay for the costs associated with the injury. Covered expenses may include medical visits, surgery, X-ray examinations, etc. Medical payment insurance is required in some states, while it is optional in other states.

 

  1. PERSONAL INJURY PROTECTION

Personal injury protection or PIP is only available in certain states. Like medical payment insurance, PIP can help you pay for medical expenses after an accident. In addition, PIP can also help pay for other expenses incurred due to injuries, such as childcare expenses or lost income. Personal injury protection is mandatory in some states and optional in other states where it is available.

 

OTHER TYPES OF AUTO INSURANCE COVERAGE

Depending on your situation, you can add the following optional insurance to your car insurance policy. Your insurance agent can help you understand the coverage of each type of insurance, so you can make a policy that suits you.

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