Auto insurance is meant to protect people from monetary losses if they are involved in a car accident. There are several types of insurance coverage and each has certain features. Some of these auto coverages are mandatory while others are optional, depending on your state. It can be time-consuming to select the best car insurance, so here is a breakdown of 5 different kinds of auto insurance coverage to help you decide.
5 Different Types of Auto Insurance Coverage
Insurance is meant to protect you from unforeseen expenses if an accident occurs. Although you may not get full coverage auto insurance, there are 5 primary kinds with a different set of coverage. A great option to obtain additional money is to apply for a tax refund advance. It helps you get your tax refund beforehand so that you don’t have to wait for it from the IRS and can cover immediate financial needs instead of turning to regular loans.
Liability
Liability insurance is mandatory in many states across the country. The minimum liability coverage demanded is different in each state and is regulated by law. You may choose among two kinds of liability auto insurance:
- Bodily Injury. This type of insurance is meant to cover medical costs for consumers if they get injured in a car accident where they are considered to be at fault. Any person mentioned as a driver on the policy may apply for this coverage.
- Property Damage. This type of insurance also covers drivers in auto accidents where they are at fault. It will cover the expenses of the property or other driver’s vehicle you might damage. This liability insurance will also cover defense and court expenses if the driver is sued.
Comprehensive
This type of coverage is designed to replace or repair the vehicle in case it was damaged by flood, hail, theft, falling objects, fire, and hitting an animal. This isn’t a mandatory policy but an optional one. Only if the finance company that leases the car demands the driver to purchase this coverage, you may need to have it to protect against potential losses.
Any driver that drives your car will be covered by comprehensive insurance so if your friend fell into a ditch, this insurance will replace the vehicle or cover repair costs. You may want to get comprehensive coverage if:
- The driver resides in a state or area prone to natural disasters (like earthquakes, volcanoes, hurricanes, tornados, and blizzards)
- The driver resides in a region with a high rate of auto theft
- The driver doesn’t have funds to cover repair expenses if an accident that isn’t covered occurs.
Collision
Collision coverage covers the costs of damage to your own property or vehicle. It may include damages from hitting a fence or tree or caused by a collision with another auto. Compared to comprehensive coverage, collision insurance is cheaper and more affordable. Besides, it’s also optional.
