In most countries around the world, auto insurance is mandatory and every motorist must keep a minimum level of it. Therefore, motorists should know about different types of car insurance policies. Today, I’ll explain 6 insurance types briefly so you can decide which one will work best for you depending on your budget and circumstances. Let’s have a look at different types of auto insurance policies.
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Liability insurance covers two kinds of damages – Bodily Injury and damage to Personal Property. If you want to register your vehicle with liability insurance, you will be required to carry a minimum amount of liability coverage, or post a bond. In case of an accident due to your fault, your liability insurance will help you pay for damages. The insurance will cover repairing costs and medical bills. Note that liability insurance does not provide any coverage for you or your passengers.
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As the name suggests, this car insurance covers any repair costs that might be needed in case your car has collided with another car or any stationary object such as a tree or a lamp post. Collision insurance is only worthwhile if you have an expensive car. For an old car that is not very costly, I do not recommend this insurance policy. God forbid if you collide with another car, stay calm and do this.
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It covers the damages to your car caused by things other than a road accident. For example, if your car has been damaged by a hail storm or it is broken as a result of a riot, comprehensive insurance will help you pay for the damages. Comprehensive insurance is also called “Other Than Collision” or “Fire and Theft”. It covers the damages as a result of theft, hail, fire, vandalism, riots, animal collisions and floods.
If you or anyone in your car gets hurt as a result of an accident, medical insurance aids you paying for the medical bills.
Personal Injury Protection aka PIP is similar to Medical Insurance, only it has a wider scope. It not only covers the medical costs, but also pays for any rehabilitation expenses, funeral costs, replacement services etc. It requires you to carry a minimum amount of PIP coverage. It doesn’t matter who is at fault, PIP will pay for medical expenses of everyone on board.
Driving without insurance is illegal, but not every motorist is insured. If an uninsured driver is responsible for an accident, you will not receive any payment. Apart from that, some motorists keep insurance, but that is not enough to cover all the damages. They have such a minimum amount of insurance coverage that it is not possible to pay for extensive medical bills and repair expenses. So, in case a motorist with small liability insurance is at fault, you will get less than what you actually need to pay for the damages that have been caused as a result of the accident. In situations such as these, Uninsured and Underinsured Motorist Protection saves the day.
This car insurance is very practical for motorists who are either uninsured or underinsured, as it is not only inexpensive, but also covers both bodily injuries and property damages.
Some companies even offer usage-base auto insurance that are affordable and help you save a lot of money too. While choosing the best insurance policy for your vehicle, it is advised to research and find the right type of auto insurance to suit your needs and budget. Some insurance policies are required by law, while others are not obligatory, but if you have them, they give you a peace of mind.
Michael Valentine is a seasoned freelance writer who combines love for language, wordplay and conversation with demonstrated experience in bringing creative contents to life. He loves and shares news on global trends that are steering development of car industry.
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