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Coverage Types: The Different Types of Auto Insurance Coverage

Coverage Types

As a driver, there are plenty of responsibilities you need to consider. Not only are you responsible for operating your motor vehicle safely, but you’re also responsible for having insurance. For first time drivers, the idea of buying insurance can be daunting.

However, insurance providers help to make the process far simpler by guiding you through the entire process. When you’re stuck trying to understand the different coverage types, it’s best to focus on the most important aspects of a policy.

The Five Most Important Types of Auto Insurance

There are dozens of things that you can add to your insurance policy; however, there are five main types of auto insurance to choose from. It’s important to read through your state laws, as some states find certain types of coverage mandatory. You may also find that others might not require you to have different coverage.

Liability Insurance

Liability insurance is easily one of the most important types of coverage you should have. Even if it’s not a requirement in your state, it’s something recommended for every driver.

What Is Liability Insurance?

This particular type of coverage is designed to cover you in the event of an accident where there are property damages and injuries when you are found at fault. Much like its name suggests, it protects you when you are found liable. Your liability insurance will be used to pay for vehicle damages and medical bills for the other people in the accident that are incurred during and after an accident.

Is Liability Insurance Required?

Most states require some type of liability insurance. With that being said, your state will likely have a minimum liability insurance requirement. It’s highly recommended that you invest in minimums that are higher than what your state recommends. This will help to make sure that you won’t be responsible for paying for damages or medical bills out of pocket. Your insurance company will not pay out more money than your set limit.

Collision Insurance

Collision coverage is another important type of coverage to invest in because it helps to protect you from having to pay a lot of money to repair your property because of an accident. This is one of the highest recommended types of coverage for people with brand-new vehicles.

What Is Collision Insurance?

As mentioned, collision is designed to protect your property. In the event of an accident, collision coverage will make sure that all repairs are covered. Even if your car needs to be totaled, your coverage will reimburse you for the fair market value of your vehicle. For example, if the cost to repair your vehicle is more than its worth, collision insurance can be quite beneficial.

Is Collision Insurance Required?

It’s highly likely that insurance coverage isn’t required by your state, but it doesn’t mean you shouldn’t invest in it. Deciding if this type of coverage is right for you or not depends on the state of your vehicle.

For example, if you’re the owner of an older car with a lower value, it might not be necessary to have collision insurance. However, people who own expensive or newer cars will surely want to have it. Additionally, if you have a lienholder, you’ll be required to have collision coverage.

Comprehensive Insurance

This type of coverage is recommended for people who are looking for coverage outside of accidents. In all reality, you can never predict when damage will affect your vehicle from other sources.

What Is Comprehensive Insurance?

As mentioned, comprehensive covers vehicle damage outside of accidents. There are hundreds of things that can damage your car ranging from weather, having your car stolen, or hitting a deer while taking a road trip.

In these circumstances, you might be left wondering whether your insurance will cover the costs of repairs. Without comprehensive insurance, they won’t. It’s essentially designed to cover you in areas that liability and collision coverage don’t.

Is Comprehensive Insurance Required?

Similar to collision insurance, not every state requires drivers to have comprehensive insurance. In fact, most states don’t. It’s highly recommended that you consider it, as long as you can afford it. It’s important to remember that comprehensive insurance makes sure it fills any gaps in your existing insurance policy.

There are also ways that you can make comprehensive insurance less expensive, such as investing in an up-to-date anti-theft system. It’s also important that new vehicles require comprehensive coverage.

Personal Injury Protection

Also known as PIP, personal injury protection is an incredibly important type of coverage to have at your disposal. It’s likely medical bills will be the most expensive part of an accident, which is why you need to consider this coverage.

What Is Personal Injury Protection?

PIP is a type of insurance that helps to make sure your medical bills are covered as a result of an accident. You would be surprised at the sheer amount of money it costs to get a CT scan, let alone follow up doctor’s visits. It’s also important to know that PIP covers the passengers of your vehicle as well.

Is Personal Injury Protection Required?

PIP isn’t a requirement for drivers, and there are a few states where these coverage types aren’t even available. If you have the option to add it to your policy, it’s highly recommended.

Underinsured/Uninsured Motorist Protection

It’s easy to be trusting; however, you can’t trust everyone on the road. Every driver can’t be treated the same, as there are plenty of people on the roads who have little coverage, or who don’t have insurance at all. This is where underinsured/uninsured motorist protection comes into play.

What Is Underinsured/Uninsured Motorist Protection?

This type of coverage is a fantastic way to make sure you’re covered if you get into an accident with an uninsured or underinsured driver. Most people opt to choose the lowest recommended coverage for their state, which is certainly not enough to cover the costs of an accident.

In addition, there are plenty of people who opt out of insurance altogether. With this highly recommended type of coverage, you won’t have to pay for anything out of pocket, as your insurance policy will cover the extra costs.

Is Underinsured/Uninsured Motorist Protection Required?

It’s unlikely that this is a required type of coverage in your state, but it is very important to consider. This is especially true as it’s one of the least expensive types of coverage you can add to your policy. You never know who you’ll be getting into an accident with, which is why underinsured and uninsured coverage is very important.

Final Thoughts

There are dozens of types of insurance ranging from towing insurance to full coverage. When you’re building your insurance policy, it’s important to go through the different things you can add.

With the help of a knowledgeable insurance agent, you can build a full policy that covers you in all situations. However, it’s most important that you first consider these five coverage types.

Coverage Types: The Different Types of Auto Insurance Coverage

As a driver, there are plenty of responsibilities you need to consider. Not only are you responsible for operating your motor vehicle safely, but you’re also responsible for having insurance. For first time drivers, the idea of buying insurance can be daunting.

However, insurance providers help to make the process far simpler by guiding you through the entire process. When you’re stuck trying to understand the different coverage types, it’s best to focus on the most important aspects of a policy.

The Five Most Important Types of Auto Insurance

There are dozens of things that you can add to your insurance policy; however, there are five main types of auto insurance to choose from. It’s important to read through your state laws, as some states find certain types of coverage mandatory. You may also find that others might not require you to have different coverage.

Liability Insurance

Liability insurance is easily one of the most important types of coverage you should have. Even if it’s not a requirement in your state, it’s something recommended for every driver.

What Is Liability Insurance?

This particular type of coverage is designed to cover you in the event of an accident where there are property damages and injuries when you are found at fault. Much like its name suggests, it protects you when you are found liable. Your liability insurance will be used to pay for vehicle damages and medical bills for the other people in the accident that are incurred during and after an accident.

Is Liability Insurance Required?

Most states require some type of liability insurance. With that being said, your state will likely have a minimum liability insurance requirement. It’s highly recommended that you invest in minimums that are higher than what your state recommends. This will help to make sure that you won’t be responsible for paying for damages or medical bills out of pocket. Your insurance company will not pay out more money than your set limit.

Collision Insurance

Collision coverage is another important type of coverage to invest in because it helps to protect you from having to pay a lot of money to repair your property because of an accident. This is one of the highest recommended types of coverage for people with brand-new vehicles.

What Is Collision Insurance?

As mentioned, collision is designed to protect your property. In the event of an accident, collision coverage will make sure that all repairs are covered. Even if your car needs to be totaled, your coverage will reimburse you for the fair market value of your vehicle. For example, if the cost to repair your vehicle is more than its worth, collision insurance can be quite beneficial.

Is Collision Insurance Required?

It’s highly likely that insurance coverage isn’t required by your state, but it doesn’t mean you shouldn’t invest in it. Deciding if this type of coverage is right for you or not depends on the state of your vehicle.

For example, if you’re the owner of an older car with a lower value, it might not be necessary to have collision insurance. However, people who own expensive or newer cars will surely want to have it. Additionally, if you have a lienholder, you’ll be required to have collision coverage.

Comprehensive Insurance

This type of coverage is recommended for people who are looking for coverage outside of accidents. In all reality, you can never predict when damage will affect your vehicle from other sources.

What Is Comprehensive Insurance?

As mentioned, comprehensive covers vehicle damage outside of accidents. There are hundreds of things that can damage your car ranging from weather, having your car stolen, or hitting a deer while taking a road trip.

In these circumstances, you might be left wondering whether your insurance will cover the costs of repairs. Without comprehensive insurance, they won’t. It’s essentially designed to cover you in areas that liability and collision coverage don’t.

Is Comprehensive Insurance Required?

Similar to collision insurance, not every state requires drivers to have comprehensive insurance. In fact, most states don’t. It’s highly recommended that you consider it, as long as you can afford it. It’s important to remember that comprehensive insurance makes sure it fills any gaps in your existing insurance policy.

There are also ways that you can make comprehensive insurance less expensive, such as investing in an up-to-date anti-theft system. It’s also important that new vehicles require comprehensive coverage.

Personal Injury Protection

Also known as PIP, personal injury protection is an incredibly important type of coverage to have at your disposal. It’s likely medical bills will be the most expensive part of an accident, which is why you need to consider this coverage.

What Is Personal Injury Protection?

PIP is a type of insurance that helps to make sure your medical bills are covered as a result of an accident. You would be surprised at the sheer amount of money it costs to get a CT scan, let alone follow up doctor’s visits. It’s also important to know that PIP covers the passengers of your vehicle as well.

Is Personal Injury Protection Required?

PIP isn’t a requirement for drivers, and there are a few states where these coverage types aren’t even available. If you have the option to add it to your policy, it’s highly recommended.

Underinsured/Uninsured Motorist Protection

It’s easy to be trusting; however, you can’t trust everyone on the road. Every driver can’t be treated the same, as there are plenty of people on the roads who have little coverage, or who don’t have insurance at all. This is where underinsured/uninsured motorist protection comes into play.

What Is Underinsured/Uninsured Motorist Protection?

This type of coverage is a fantastic way to make sure you’re covered if you get into an accident with an uninsured or underinsured driver. Most people opt to choose the lowest recommended coverage for their state, which is certainly not enough to cover the costs of an accident.

In addition, there are plenty of people who opt out of insurance altogether. With this highly recommended type of coverage, you won’t have to pay for anything out of pocket, as your insurance policy will cover the extra costs.

Is Underinsured/Uninsured Motorist Protection Required?

It’s unlikely that this is a required type of coverage in your state, but it is very important to consider. This is especially true as it’s one of the least expensive types of coverage you can add to your policy. You never know who you’ll be getting into an accident with, which is why underinsured and uninsured coverage is very important.

Final Thoughts

There are dozens of types of insurance ranging from towing insurance to full coverage. When you’re building your insurance policy, it’s important to go through the different things you can add.

With the help of a knowledgeable insurance agent, you can build a full policy that covers you in all situations. However, it’s most important that you first consider these five coverage types.

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