Auto insurance is like an umbrella that provides coverage for your car and medical expenses against damages caused by accidents, thefts and even natural calamities.
Accidents can happen due to your fault or the fault of another driver who might be insured or uninsured. Either way, an accident can cause severe damage to your car and your health. This is where auto insurance really helps by covering your financial loss. There are different types of auto insurance policies and you will have to pay a premium on a monthly, quarterly or annual basis depending on the insurance company. Depending on the amount and type of policy, the premium amount is decided upon.
Auto insurance provides comprehensive or basic coverage on the grounds of property damage, liability and medical needs. Most of the auto insurance policies are valid for a period of 6 months to a year and they can be renewed by paying the premium.
Types of Auto insurance coverages:
There are six different types of auto insurance coverages and the premium, as well as the cover amount, is different for each one of them. They are:
This is one of the popular auto insurance coverages. The comprehensive auto insurance policy will provide you with financial coverage against loss due to auto theft and damages caused by any other object other than a car. It covers damages caused by fire, hail, earthquake, vandalism, animals, flood, riots and explosions.
It will also cover damages to the windshield. Comprehensive insurance generally comes with a deductible between $100 and $300 and the higher the deductible, the lower the premium.
The collision coverage pays for damages to your car caused due to a collision with another car. Collision coverage will also take care of damages caused by potholes, which can be quite a nuisance at times and can also lead to chain accidents. The deductible for a collision auto insurance policy varies between $250 and $1,000. If you pay a higher deductible amount then your policy premiums will be lower. The collision auto insurance coverage will reimburse you irrespective of who caused the accident.
Property Damage Liability
The property damage liability coverage will pay for damages caused by you or the driver of the car to someone else’s property. For example, if your driver hits someone else’s fence or mailbox, then this policy will cover the damage caused. It also covers damages to lamp posts and building structures.
Bodily Injury Liability
The bodily injury auto insurance coverage is not applicable for covering injuries to you. This auto insurance policy will cover the injuries caused by you as a policyholder or your driver to someone else. This auto insurance will also be applicable if your family members are listed on the policy as drivers of your vehicle.
It is advisable to always go for a higher amount of bodily injury auto insurance coverage because if your car is involved in a fatal accident then you could be sued for a big amount.
Personal Injury Protection (PIP)
The PIP auto insurance policy coverage will pay for injuries caused to the driver and passengers of your or policy holder’s car. PIP reimburses payments made towards medical treatments, lost wages and even funerals.
Uninsured and Underinsured Motorist Coverage
This auto insurance policy will provide coverage for damages that you have incurred as a result of an accident caused by an uninsured driver.
Underinsured coverage plays a major role if the person at fault doesn’t have the required liability insurance to pay for the damages or injuries caused.