Auto insurance may be required by law, but when you are building an auto insurance policy, you must be aware of all of the coverages that are available and how these coverage options work. The insurance requirements set by state officials are designed to help protect drivers on the road, and optional coverage will offer you protection for an additional premium. As you are obtaining auto insurance quotes and comparing premiums, it is important to distinguish between coverages you need and coverages that will act as supplemental insurance. Here is your straightforward and basic guide to understanding the types of auto insurance coverages that may be available to you.
Liability Coverage Options
When you are driving, you are found liable for an accident when you are at-fault. When you are liable, it is your responsibility to pay for repair bills and medical bills so that the injured party can recover from the loss. Liability coverage is what will help you as the at-fault party pay for the damages you cause to a third party. In most states, liability coverages are the only coverages required by law. Here is a breakdown of what each form of liability insurance covers:
Almost every state requires drivers to carry Bodily Injury Liability coverage. Bodily Injury will pay for medical bills when a third party is injured due to your negligence. This coverage will not pay for your medical bills or the medical bills of your passengers.
Another state requirement is Property Damage cover. This cover will pay to repair or replace a third party vehicle when it is damaged in an accident that you are more than 51% at fault for. If more than one vehicle is damaged, the policy will only pay up the limit stated for all vehicles involved.
Coverages Meant to Protect You and Your Vehicle
Many states do not require drivers to purchase coverage to protect themselves. Some no-fault states, like Florida, will require drivers to purchase coverage to protect themselves and not liability coverage like the ones above. Here are some coverage options that may be required or optional:
Uninsured Motorist Bodily Injury
Drivers may be required to carry liability insurance, but Uninsured Motorist will pay to cover your injuries if you are hit by someone who does not comply with auto insurance laws. This coverage will also help pay to cover your medical bills if the at-fault party does not have enough coverage to cover all your bills.
Medical Payments Coverage
Medical payments is typically an optional form of cover available that will pay for your medical bills and the medical bills of your passengers regardless of fault. This coverage is useful when you do not have medical insurance, or when you have a high co-payment.
Personal Injury Protection
In no-fault states, you may be required to carry Personal Injury Protection, also known as PIP. PIP will pay for your medical bills, lost wages, funeral costs and other expenses that may stem from an automobile accident.
States do not require any driver to carry Physical Damage coverage for their vehicle, but if your vehicle is financed or leased the lender will require that you carry comprehensive and collision. Comprehensive is a physical damage coverage designed to cover damage to your vehicle in the event of fire, theft, vandalism, natural disaster, or collision with a live animal.
Collision is also a form of Physical Damage coverage that will pay to fix or replace your vehicle when it is damaged or totaled due to an automobile accident. You will be required to pay a deductible, but the coverage will pay for repairs up to fair market values regardless of fault.
Now that you understand what types of coverage options are available, it is time retrieve quotes to see which coverages and limits you can afford. Make sure to review premiums for optional cover, check the reputation of car insurance companies, and choose the policy that is adequate and affordable.