What Types of Car Insurance Coverages Do I Need?
Most auto policies are divided into various kinds of coverage and it can be difficult to keep track of when shopping for good car insurance. By understanding the different types of coverage in this guide, you will be ready to speak with an insurance agent.
Generally coverage is the same regardless of the company you choose. However, be mindful that there may be slight differences in the details and depending on the state you live in may have specific minimum requirements and different coverage choices.
Table of Contents
Collision Coverage
Collision coverage pays for repairs to your car if you are involved in an accident with another car or object. Comprehensive coverage pays for damage to your car caused by events such as fire, theft, or vandalism.
Do I need Collision Coverage?
Yes, when you have a loan on a car, collision coverage is usually mandatory. If you don’t have a loan, it’s usually an optional coverage. If you own an older car, it may not be worth it to insure, especially if you have a financial cushion to replace the car in case of an accident. Whether you choose to get collision or not is a personal choice. It’s best to talk to an agent to get an understanding of the cost of adding collision to your policy. This way, you can make an informed decision about whether or not to proceed.
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Liability Coverage
Liability insurance covers the costs associated with any damage you may cause to another person or their property in an automobile accident. It is the most basic form of coverage and is required by most states.
Do I need Liability Coverage?
Property damage liability is insurance that covers the damage you do to other vehicles and/or structures/property. Each state has its own minimum limit for this coverage, but it has been suggested that to get at least $25,000 in Property Damage Coverage, even if your state’s requirement is lower. If are at fault and the damage caused is more than your coverage limit, you will have to pay the remaining cost from your own pocket.
Bodily Injury Liability covers the person you injured in an accident. This insurance pays for damages incurred from medical bills, wage loss, and funeral services. It is suggested to get a minimum of 100/300 liability policy.
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Uninsured/Underinsured Motorist Coverage
Uninsured/underinsured motorist coverage pays for damages incurred in an accident caused by a driver who is either uninsured or underinsured. This coverage is important because it provides protection if you are in an accident with someone who does not have sufficient insurance coverage.
Do I need Liability Coverage?
Yes, you will want this coverage when you are not at fault, and the other party doesn’t have adequate insurance to cover the damages done to you.
This coverage protects when the liable party is unable to pay. Agents recommend this coverage to protect against hit and runs, and accidents involving unemployed persons.
Medical Payments Coverage
Medical payments coverage pays for medical bills related to an automobile accident, regardless of who is at fault.
Do I need Medical Payments Coverage?
Yes, especially if you have no or limited health insurance. Even if you have health insurance this is nice because there are no deductibles or copays. The coverage also covers your passengers regardless of fault. Check with your agent to see availability.
Personal Injury Protection Coverage?
Personal injury protection coverage pays for medical expenses and lost wages for you and your passengers in the event of an accident, regardless of who is at fault. This type of coverage is often required in no-fault states.
Do I need Personal Injury Protection Coverage?
Yes and No. Personal injury protection is similar to Medical Payments Coverage in that it will cover medical bills despite who is at fault. However, a specified amount of medical bills must be incurred before this coverage will take in to effect.
Continue to learn about saving on car insurance
This car insurance coverage guide should help get you started, but we have a number of additional resources to help you learn and save money. Some have of them have been linked in the guide, but here are some more:
