8 Types of Auto Insurance Coverage to Consider for Shoppers
Buying a car is a daunting process, but the part many people find most confusing doesn’t have much to do with the car itself. Getting auto insurance coverage that meets local requirements and gives you the protection you need is no small feat.
If you have too little insurance and get into a wreck, you might end up with huge bills. In that case, you have to pay to repair or replace your car and pay out of pocket for other drivers’ expenses, too, when you’ve found at fault.
Without enough coverage, others could sue you for damages and even get into legal trouble with your state if police responding to the accident find you don’t have the insurance your area requires. That’s not all—In some states, you can’t get compensation from a driver who hits your car’s insurance unless you have proper coverage yourself.
It’s clear that you need the right car insurance coverage if you don’t want to end up in hot water. But aside from state minimum car insurance requirements, how are you supposed to know what to get?
Here’s how: Read this quick and easy article about some of the many coverage options available to you.
1. Bodily Injury Liability Insurance: It’s Required
Before digging into the details of bodily injury liability coverage, here are the exceptions to the rule.
There are only two states in the USA that don’t require you to buy car insurance: New Hampshire and Virginia. However, that doesn’t mean it’s a good idea to skip the purchase.
If you don’t have bodily injury coverage, you need deep pockets. In both Virginia and New Hampshire, you have to be able to pay for any damage you cause. In the event that you injure someone or damage someone’s property, you could be out tens or even hundreds of thousands of dollars.
There are ways to come up with cash, fast, but wouldn’t you rather use those options to finance things like new home appliances? Here’s how to avoid paying huge medical bills if you end up in a wreck.
Remember, it’s required in 48/50 states, and here’s why:
Bodily injury liability is coverage that helps you pay if you cause an accident and injure or kill someone else.
It’s split up into two sections: Per person and per accident. Insurance per person is the most your insurer will pay for each individual that gets hurt. Insurance per accident is what it sounds like—the most they’ll pay in total, no matter how many people are injured.
Some states have lower requirements for bodily injury coverage than others do. When you’re setting up your insurance, consider more than the minimum requirements.
If your state requires $10,000 per person and $20,000 per accident, that may not be enough to cover the medical bills you’re responsible for. If worse comes to worst and you can’t pay, victims can sue you for hefty sums.
2. Property Damage Liability Coverage
The other kind of insurance that a lot of states require is property damage liability. This coverage pays for repairs if you do damage to somebody else’s property in your car. That property could include their car, their mailbox, their home, and more.
The minimum amount of property damage liability insurance you need depends on your state. As with bodily injury insurance, you may well want more than the minimum coverage. That way, when you get into a wreck with a luxury car, you won’t have to worry so much about paying thousands of dollars out of pocket.
3. Uninsured/Uninsured Motorist Coverage
As you read, if you hit someone else and you don’t have enough coverage to pay for their medical bills and/or property damage, you could be sued and have to pay those costs out of pocket. You might be wondering what happens when you’re the “someone else” who gets hit.
Here’s the ideal: The driver who hits you stops, gives you their information, and has enough liability insurance to pay the bill. In less ideal circumstances, they stop trading information but don’t have the right amount of coverage.
Worst case? They hit and run, and you’re left to figure the situation out on your own.
Uninsured and underinsured motorist coverage is there so you can avoid hunting down hit-and-run drivers and dealing with complicated legal battles. Some states require this coverage, but others don’t. Your insurance agent will help you navigate what the law requires.
This coverage often costs more where there are more uninsured drivers. So, if you’re living in New Hampshire or Virginia, be prepared for a steep premium if you pay for insurance.
4. Collision Insurance Coverage
Collision coverage pays to repair your car or replace it if it’s damaged in an accident with an object or another vehicle. It could also pay if you’re in an accident all by yourself—Say if you flip your car by turning too fast, for example.
If you’re making payments on your car, lenders tend to require collision coverage. Once it’s paid off, collision insurance is optional. It comes with a deductible that you’ll have to cover before it pays out.
The higher deductible you choose, the more you’ll have to pay in an accident. Yet, a high deductible means your insurance premium—that is, the amount you pay each month, or a few times a year, depending on what you choose—is lower.
5. Coverage for Medical Payments
While injury liability insurance covers medical payments for drivers you injure in accidents you cause, medical payments coverage pays for costs incurred by yourself and passengers in your vehicle.
When you’re in a wreck caused by someone else, the other driver pays for your medical costs with their bodily injury liability insurance. Medical payments coverage pays for your bills when you cause the accident.
It’s often not required, but it may help pay for costs that aren’t paid by other coverages. For example, it could cover your health insurance deductible. So, you might consider getting an amount of medical payments coverage greater than the base amount not covered by health insurance.
6. Personal Injury Protection (PIP) Insurance
Personal injury protection (PIP) insurance, is also known as no-fault insurance. As the name implies, it pays medical expenses that aren’t covered by your health insurance.
If you’re confused about how that’s different from medical payments coverage, you’re not alone. Here are the main differences:
- Medical payments coverage is only available where PIP isn’t.
- While medical payments insurance covers you when you cause an accident, PIP pays for your injuries regardless of who caused the accident.
- PIP is available—often required—in “no-fault” insurance states.
- PIP pays for things like childcare and lost wages when you’re incapacitated, while medical payments coverage doesn’t.
In most cases, PIP won’t pay for If another driver causes significant injury to you or your passenger(s) or your expenses exceed an amount set by the state, you may be able to file a lawsuit against them to cover expenses that exceed your coverage.
7. Comprehensive Auto Insurance Coverage
If you’re not familiar with different kinds of auto coverage, you might think that comprehensive insurance is a term for the whole policy, something like “full coverage.” In fact, it’s a part of your policy that you’re not required to have by law.
Comprehensive insurance, together with the other coverages in this list, could be considered full coverage car insurance.
Comprehensive insurance is all for your benefit: Unlike collision insurance, which is insurance for accidents, comprehensive insurance covers the cost of repairing or replacing your car following anything but accident damage—anything, that is, that the policy either names as a covered peril or doesn’t exclude, depending on the kind of policy you have.
Some things comprehensive insurance often covers include theft, vandalism, fire, and hail. Many policies cover other perils as well, but those are among the most common.
8. Rental and Transportation Reimbursement Coverage
This optional coverage is one of the lesser-known kinds of car insurance. When you’re in an auto accident, or if your car breaks down, is crushed under a tree, or goes out of commission some other way, you’re unlikely to get a new car right off the bat.
In some cases, your car might be repairable, and you’ll have it back in a couple of weeks. At other times, you need some time to shop around and choose a new vehicle. In the meantime, you need a set of wheels: That’s where rental car and transportation reimbursement comes in.
Rental car coverage is limited to a given dollar amount per day ($30-50 is typical) for a certain number of days, in most cases. Transportation reimbursement refers to other transportation costs, such as a bus or taxi you take from an accident back to your house.
Note that your insurance needs to cover the accident or breakdown for you to use your rental/transportation coverage.
Do You Own a Car and Need Cash Fast?
With this information about key types of auto insurance coverage, you can make sure you have the right coverage for your needs. As a car owner, you’re in a great position to get a loan even if your credit score isn’t the best.
With a title loan, you can use your car’s title as collateral instead of a credit score. TFC Title Loans is here to help you meet that goal. When you’re ready to put some extra money in your pocket, contact us to get started.
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