- Car insurance can protect you financially if you’re involved in an accident that results in property damage, injuries, or the death of another person.
- Car insurance policies are made up of different types of coverage that cover different risks.
- Some types of car insurance coverage are required by state law, while others are optional.
- There are also other types of optional coverage that you may want to consider.
Six Types of Car Insurance Coverage, Explained
The six major types of cable car policy coverage are :
Reading: Six Types of Car Insurance Coverage
- Bodily Injury Liability (BI)
- Property Damage Liability (PD)
- Medial Payments or Personal Injury Protection (PIP)
- Underinsured/Uninsured Motorist
here ‘s a close look at how each one ferment .
Bodily Injury Liability Insurance ( BI )
Bodily wound indebtedness indemnity is designed to pay medical expenses for person else if you injure them in an accident where you ‘re deemed to be at defect. This coverage can apply to you and to anyone else listed as a driver on your policy.
place Damage Liability Insurance ( PD )
property damage indebtedness indemnity besides covers you in accidents in which you ‘re at fault. It pays for repairs to the early driver ‘s vehicle or other property you may damage.
medical Payments or Personal Injury Protection Insurance ( PIP )
If you or a passenger in your fomite are hurt in an accident, medical payments or personal injury protection coverage can help pay any resulting medical bills. This type of coverage can besides cover lost wages if you or an injure passenger are unable to work or funeral expenses if person in your vehicle dies because of an accident.
While property damage indebtedness policy pays for wrong to person else ‘s vehicle or property following an accident, collision coverage pays for damage to your own vehicle or property. That can include damages caused by a collision with another vehicle or hitting a stationary object, such as a tree or fence.
comprehensive coverage reimburses you for passing, larceny, or damage to your vehicle caused by something other than a collision. For exemplar, that can include fire damage, damage from hail and other falling objects, or wrong caused by animals.
Underinsured/Uninsured Motorist Coverage
Underinsured motorist coverage can protect you if you ‘re involved in an accident where the driver who ‘s at defect does n’t have sufficient insurance. Uninsured motorist coverage is meant to protect you if you ‘re in an accident with a driver who has no policy at all.
If you ‘re financing a vehicle, your lender may require that you take out collision and/or comprehensive coverage and keep it until the loanword is paid off.
How Insurance coverage Requirements Vary by State
Every state but New Hampshire requires you to have both bodily injury liability and property damage liability coverage. ( New Hampshire drivers do have to meet certain fiscal province requirements to forgo indebtedness coverage. )
In the remaining states, there are besides minimum dollar amounts for the coverage you must carry. Bodily injury liability can have two dollar limits : one per person and another per accident, while there ‘s only one limit for place damage.
coverage limits are typically expressed in your insurance policy by a succession of numbers. sol, for case, if your policy has a $ 25,000 bodily injury liability limit per person, a $ 50,000 bodily injury indebtedness terminus ad quem per accident, and a $ 25,000 property damage indebtedness limit, your policy would express it as 25/50/25 .
It ‘s important to note that the minimal coverage limits are good that—minimums. You can opt to purchase coverage above those limits, and that ‘s often a smart idea.
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Whether you ‘re legally required to carry medical payments/PIP insurance, collision coverage, comprehensive examination coverage, or underinsured/uninsured motorist coverage depends on your state of matter. And again, the minimal coverage amounts you ‘re required to have for each one can vary .
other Kinds of Optional Car Insurance coverage
Depending on the policy company, you may be able to add early types of car indemnity to your policy besides the six listed above .
For example, that might include :
- Roadside assistance insurance
- New car replacement coverage
- Gap insurance
- Towing and labor insurance
- Rental car reimbursement insurance
There are besides scenarios that may require specialization indemnity coverage. For exemplar, if you have a classic or antique cable car you may need an insurance policy that takes the car ‘s age, respect, and how much you drive it into bill. You could besides purchase forte coverage for a vehicle that you leave in storage or if you use your cable car to offer ride-sharing services .
What Happens if You Do n’t Have Car Insurance ?
careless of where you live, it ‘s against the law to drive a vehicle without cable car policy ( or meeting fiscal province requirements, in the case of New Hampshire. Financial province laws require you to furnish proof that you can pay damages yourself if you ‘re involved in an accident. )
If you drive without indemnity and an accident occurs, respective things can happen. First, you could be ticketed and/or charged with a drive irreverence, according to the laws in your country and based on the circumstances of the accident. At a minimum, you may have your driver ‘s license suspended or revoked.
additionally, you could face a civil lawsuit if you ‘re at fault in the accident and cause physical injury or property damage. Without an indemnity policy to pay damages, you could be held financially responsible for covering person ‘s checkup bills and/or for repairs to their vehicle. Depending on the extent of their injuries or the property damage, that could be financially devastating.
Shopping for Car indemnity
If you need car indemnity, it pays to research different companies and policies first. then get quotes from several insurers. Pay especial attention to the policies ‘ premiums and deductibles so you can make a carnival monetary value comparison .