Types of Car Insurance
Confused about what car insurance is the best for you? Caliber is here to define and help guide you through the process. Cutting through the clutter to find the right insurance coverage is easier when you understand the basic types of auto insurance on today’s market. A preview of available coverage can help you determine which policy best fits your needs.
Liability insurance is one of the most common types of car insurance. This type of basic coverage is required in most states, with drivers mandated to purchase a policy with a minimum amount of coverage. Two types of coverage provided under liability car insurance are bodily injury and property damage liability. Bodily injury covers the medical costs of other people injured in a motor vehicle accident if you are at fault. Property damage liability covers the damages you may cause to someone else’s property while you’re operating your car..
Another type of car insurance that is commonly purchased by drivers is collision insurance. This car insurance coverage covers expenses incurred if you hit another car or an object, such as a fence, while operating your car. Collision insurance is an optional type of coverage in most states, but if you are leasing or owe on your car, your finance company likely requires that you maintain collision coverage.
Like collision insurance, comprehensive car insurance is usually optional except on financed autos where lenders require it as part of the auto loan’s terms and conditions. Comprehensive coverage pays for most other potential losses drivers may experience that are not related to a collision, such as damages caused by vandalism, theft, hail, or fire. If you purchase collision and comprehensive insurance together, it is sometimes called full coverage insurance. Some insurance companies require that you purchase both collision and comprehensive, but others offer a la carte coverage.
Underinsured/uninsured motorist insurance
If your vehicle is damaged or you are injured during a vehicle accident involving an underinsured or uninsured motorist, this type of coverage may pay your medical costs — or even your vehicle repair costs in certain states. An underinsured driver has insurance but not in the amount necessary to cover your losses, and an uninsured motorist has no insurance coverage in force at all.
The Insurance Research Council reports one in eight drivers — or roughly 12.6% of all drivers — operate vehicles without insurance. The number drastically varies by state, however. New Jersey has the lowest percentage of uninsured drivers at only 3.1%, while Mississippi has the highest rate at 29.4%.
Personal injury protection (PIP)
Another valuable type of auto insurance coverage is personal injury protection, or PIP. PIP policies are not available in all states, but in those states where this type of vehicle insurance is available, it can help pay the cost of medical expenses, lost wages, and other damages that result from a covered injury.
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