6 Types of Car Insurance Policies for Every Vehicle Owner

Before you purchase a vehicle, you should know how automobile insurance works. There are different types of insurance policies to cater to your needs. In the event of an accident or loss, having a car insurance package can protect you, your passengers, and your vehicle financially. This will also help you serve justice to someone affected by an accident in which your vehicle is involved.

Every country or state requires you to have mandatory insurance coverage. Therefore, you should have a better understanding of the different types of policies so that you can choose the right kind of insurance package for you. Here are 6 types of the most common types of car insurance policies:

Liability Coverage

Liability coverage is one of the most common and legally-required policies in most states. Every driver should have the minimum coverage defined by law. There are two components of liability coverage called BI liability and PD liability.

Under BI (bodily injury) liability, you will be financially responsible for the other party’s injury if you’re the one who caused the accident. This may also cover legal fees if lawsuits are involved. PD (property damage) is when you are held financially responsible for causing damages to someone’s property during an accident. The amount of money you can claim during BI/PD will be limited to your policy coverage.

Underinsured/Uninsured Motorist Coverage

This is another crucial vehicle insurance policy a driver/vehicle owner should possess. If you meet with an accident and another driver is at fault, uninsured policy coverage can be of assistance when the driver at fault does not have liability insurance. As for an underinsured policy, it comes into play when the driver at fault does have liability insurance, but his policy is insufficient to pay for your losses.

An uninsured policy will also help to financially protect you if the driver who caused the accident flees before any investigation can take place. These policies are optional in some states, but compulsory in others.

Comprehensive Coverage

Comprehensive coverage is mostly an optional insurance policy to protect your vehicle from loss or damages caused by something other than a collision with another vehicle or object. Therefore, it is also called “other than collision coverage”.

Comprehensive coverage insures your vehicle from damages caused by fire, theft, explosion, earthquake, riots, flood, etc. Though it is optional, it is highly recommended you get one, especially if you are leasing or paying off your vehicle in installments as your lender may want you to have one. For comprehensive coverage, the amount you can claim during these kinds of accidents could be the actual cash value of the vehicle.

Collision Coverage

Collision coverage is there to pay for any damages caused to your vehicle if it collides with another vehicle or other objects such as a tree or fence. It will help pay for the repair or replacement of the vehicle. This is another optional policy – unless your lender requires you to have one while you’re still making car payments.

Medical Payments Coverage

Medical payments coverage is an optional policy that is meant to protect you and your passengers no matter who caused the accident. This policy may cover hospital/ doctor’s appointments, surgery/x-rays, ambulance/emergency care, or professional nursing services. Health insurance deductibles and co-payments may also be applicable. You can choose limit coverage based on your needs, and don’t forget to take into consideration the emergency medical costs!

Personal Injury Protection

Personal injury protection is only available in some states where it is mandatory. This policy will pay for medical expenses that are not covered by your health insurance for injuries caused by an accident. This will also pay for expenses that come with accidents like lost wages or childcare. The coverage limits may depend on where you live.

A Final Word

These are some of the basic insurance policies for vehicles that are designed to protect you, your vehicle, and the passengers involved. Each of them serves a unique purpose to make life easier during an accident. These policies can be highly beneficial if one is not in a good place financially in the face of such a tragedy.

If you are hunting for vehicle insurance, now that you have a fair knowledge of what each policy means you have to look for a reliable insurance provider. Depending on your financial capability and what you need to cover, you can opt for the most suitable package you want.