Skip to main content

Car Insurance Coverage: Auto Coverage Types & More

 

Car Insurance Coverage: Auto Coverage Types & More

family sitting in the back of a mini-van

With so many different coverages, it's hard to know what's right for you. Understanding the different types of coverages can help you find the right car insurance policy for your needs and budget. Learn about types of auto insurance coverage.

What is car insurance?

Car insurance helps provide financial protection for you, your family, other passengers, and your vehicle. You can choose the amount of protection by selecting your coverages and limits. An auto insurance policy can provide coverage for:

  • Accidents
  • Liability
  • Medical expenses
  • Property
  • Vehicles

Understanding Your Auto Insurance

Your auto insurance policy consists of multiple coverages that provide protection in different situations involving your vehicle. Coverages have different limits and may have deductibles. Specific coverages and limits may also be required by a lienholder or lender.

To better understand your policy, there are several insurance terms you should know:

  • Coverage: protection and benefits provided to you
  • Limits: maximum amount of protection for a specific coverage
  • Policy: contract between you and your insurance company
  • Premium: price of your insurance policy
  • Deductible: portion you pay out of pocket, if you file a claim

When you compare car insurance rates, make sure they're for the same coverages, deductibles, and limits. Shopping for car insurance is easy and fast . Learn more about how auto insurance rates are determined.

Types of Car Insurance Coverage

First, let us clarify that there's no such thing as "full coverage." Some people may say "full coverage" means the minimum liability coverages for their state, comprehensive coverage and collision coverage. But it could also mean something else. Ultimately, you should choose the coverages that are right for you. "Full coverage" is an insurance myth.

What are the different types of coverages? Auto insurance includes liability coverages, vehicle coverages, coverages for yourself, and other optional coverages.*

Liability Coverages

Liability Coverages include:

  • Bodily Injury liability: pays damages for bodily injury or death resulting from an accident for which you are at fault
  • Property Damage liability: pays for damage to someone else's property resulting from an accident for which you are at fault

For serious accidents, you want enough insurance to cover a judgment against you in a lawsuit without jeopardizing your personal assets. Therefore, it's a good idea to have the same level of bodily injury coverage for all your cars. You may also want to consider an umbrella policy which provides additional coverage for more serious accidents and lawsuits.

Medical Coverages

  • Medical Payments coverage: may pay medical expenses related to a car accident
  • Personal Injury Protection coverage: may pay for your medical treatment, lost wages, or other accident-related expenses regardless of who caused the accident

Uninsured Motorist Coverages

  • Uninsured Motorist coverage: may help compensate you for your injuries or property damage caused by a driver without insurance
  • Underinsured Motorist coverage: can protect you from at-fault drivers with insufficient insurance coverage to pay your claim

Vehicle Coverages

  • Collision coverage: may pay for damage to your car when it hits, or is hit by, another vehicle or other object
  • Comprehensive coverage: may pay for damage to your car from theft, vandalism, flood, fire or other covered losses

You may be able to lower your premium if you select a higher deductible. If you have an older vehicle you may want to consider whether you need these coverages as they are normally limited to the cash value of your car.

Additional Auto Insurance Coverages

  • Emergency Road Service
  • Rental Reimbursement
  • Mechanical Breakdown Insurance

How much car insurance do I need?

The right amount of auto insurance coverage comes down to your needs, budget, and state requirements. Some things to keep in mind when choosing your coverage are:

  • Which coverages and limits does my state require for all drivers?
  • Does my lienholder have coverage requirements?
  • Do I need to protect any other assets, such as my home?
  • How much can I afford to pay out of pocket at any given time?
  • What is my vehicle worth now?

We recommend checking your state insurance minimums and reviewing all coverage options to make sure you have the right coverage. Our Coverage Calculator can help you find the right amount of coverage and the right deductible to fit your budget.

Comments

Post a Comment

Popular posts from this blog

Why Is Auto Insurance More Expensive for a Teenager?

  Why Is Auto Insurance More Expensive for a Teenager?  It costs a lot to raise a teenager, but luckily there are ways to save on how much you’re spending.  One of the times “raising a teenager expenses” go up is when your young adult starts to drive. No matter how well and safe they have been taught to drive, having a teen behind the wheel is likely to cost more in car insurance than you may have anticipated.  That is often enough to leave parents with a simple question: Why is insurance more expensive for a teenager? By getting the right answers, you can satisfy your curiosity and save a bit of money along the way. Keep reading to discover everything you need to know about why coverage for a teenager is more expensive.  Why Car Insurance Is So Expensive for Young Drivers   Why is car insurance so expensive for t...
Post a Comment
Read more

Auto insurance basics—understanding your coverage

Auto insurance basics —understanding your coverage The basic personal auto insurance mandated by most U.S. states provides some financial protection if you or another driver using your car causes an accident that damages someone else’s car or property, injures someone or both. But to make the best decisions about purchasing other types of auto insurance coverage you might need, you’ll want to understand what’s covered, what’s not covered and what’s optional. In addition to understanding types of coverage, you’ll also want to consider coverage amounts. Why? Because state-required minimums may not cover the costs of a serious accident, so it’s worth considering purchasing higher levels of coverage. Here’s a rundown of the types of coverage available—some are required; others are optional; all are priced individually (a la carte) to let you customize coverage a...
Post a Comment
Read more

How Much Insurance To Buy and What Types of Coverage Do You Need?

  How Much Insurance To Buy and What Types of Coverage Do You Need? In order to register a car in Massachusetts, you must have automobile insurance .  By law, you must purchase four coverages called Compulsory (or Mandatory) Coverages in, at least, minimum amounts required by law, and in higher amounts if you choose to do so.  You may also buy a variety of Optional Coverages to suit your needs.  Compulsory Coverage There are four insurance coverages that are compulsory in Massachusetts: Bodily Injury to Others protects you, or someone you allow to drive your car, from legal liability if you accidentally injure or cause the death of someone else while operating your car.  It only covers losses if the accident occurs in Massachusetts and does not cover the injury or death of a passenger in your car.  You must buy at least $20,000 per person and $...
Post a Comment
Read more