Car insurance is a necessary purchase for vehicle owners in most places, as it offers protection in case of accidents or unexpected events. When you pay your premium, you’re essentially entering an agreement with your insurer to cover certain types of damages, accidents, and liabilities that might occur. In many states, having at least the minimum auto insurance is mandatory before you can legally drive your car.
Most car insurance policies typically consist of property coverage, liability coverage, and medical coverage, all of which protect different aspects of your vehicle and its use. Property coverage takes care of damages to your car from events like theft or vandalism, while liability coverage protects you if you’re at fault for an accident that injures others or damages their property. Medical coverage helps cover costs for treatments, funeral expenses, or rehabilitation following an accident.
While state laws differ, there is usually a minimum required amount of coverage that must be included in your car insurance policy. Generally, auto insurance is broken down into six main types of coverage:
1. Bodily Injury Liability
Bodily injury liability is a crucial part of your auto insurance. It helps cover costs when you are responsible for injuring someone else in an accident, even if you’re driving a vehicle that doesn’t belong to you. This coverage can help pay for medical expenses, pain and suffering, or legal fees in case you’re sued due to the accident.
2. Property Damage Liability
Property damage liability is essential when it comes to covering any property you damage in an accident. Whether you hit another car or damage public property like fences, telephone poles, or buildings, property damage liability will help pay for repairs. This coverage applies when you’re driving your own or someone else’s vehicle with permission.
3. Comprehensive Coverage
Comprehensive coverage goes beyond collisions. It covers damage to your vehicle caused by events that aren’t related to an accident, such as theft, fire, vandalism, natural disasters, or falling objects. Typically, this type of coverage applies when your car is parked and not in motion.
4. MedPay or Personal Injury Protection (PIP)
MedPay or Personal Injury Protection (PIP) coverage helps cover medical expenses for you and your passengers after an accident, regardless of who’s at fault. In addition to medical bills, PIP can also cover lost wages, funeral costs, and other related expenses following an accident.
5. Collision Coverage
Collision coverage helps pay for repairs to your vehicle if it gets damaged in a crash with another vehicle or object, even if you’re at fault. This coverage is important to have if you want your car to be repaired or replaced without having to pay out-of-pocket for the full cost of damages.
6. Uninsured and Underinsured Motorist Coverage
Uninsured and underinsured motorist coverage protects you if you’re in an accident with someone who doesn’t have enough insurance or no insurance at all. This type of coverage steps in when the at-fault driver cannot cover the costs of the damages or injuries they caused, including hit-and-run accidents.
