Types of Auto Insurance

There are many different auto insurance policies. The types of auto insurance that you have may fall under several different classifications with some overlap. You can classify them by risk, coverage and usage.

Function

Private policies have several different types of ratings for policies based on how the automobile is used. Insurance companies calculate the cost based on whether you drive your car to work, use it for business or simply use it occasionally for pleasure. The lowest cost is the pleasure use rating. The more miles you drive, the higher the cost for your insurance. If you use your car as part of your job, like a salesman for example, you would pay a highest cost.
Insurance companies also rate you by the total number of miles you drive annually. These two bits of information give insurance representatives a multiplier to calculate your premium. The multiplier might be less than one for those that seldom use their vehicle.

Effects

High-risk insurance is applied to those drivers who have a bad driving record, were temporarily uninsured while still driving, or have a bad credit rating. There are also standard and preferred risk policies. Preferred risk policies include people with a perfect driving record, a great credit record and those who live in low crime areas. Other factors that calculate into deciding whether the driver gets a standard policy or a lower cost preferred risk policy is whether he parks the car on the street or in a garage.

Identification

Carry classic car insurance if you have an antique car. Since most people don't drive their classic or antique cars often, there are special provisions. You also need special coverage because there is no standard book to look up the price of classic cars. When you apply for the policy your agent will fill out the standard forms and ask you for a photo to include for the underwriters, the people at the home office that make the decision on whether you get insurance. He'll also ask you to have the car appraised by an expert and bring in a written appraisal. You can select the time of year that you want full coverage and the time that you want only comprehensive coverage. Since many classic cars are stored most of the time but brought out for parades and gatherings in the summer, limiting the coverage to comprehensive only coverage for the other months will keep your premium reasonable.

Features

Check for the basic parts of insurance. Comprehensive damage to your auto, collision damage to your auto, bodily injury liability to others, property damage liability to others, under/uninsured motorist coverage, medical payments to others, towing and rental reimbursement are the basic coverage needs required regardless of how a policy is classified. Comprehensive and collision coverage both require a deductible. Collision coverage covers accidents caused by your car hitting something and comprehensive is everything else, like fire damage.
The liability section includes bodily injury to others and property damage. Insurance companies write liability as a single limit or split limit with the numbers written either as 100,000 or 50/100/15, for example. The single limit means the company pays just 100,000 no matter how many people are injured or what the property damage is. The split limit means they'll pay 50,000 maximum for any one person for bodily injury, a total of 100,000 maximum for bodily injury and 15,000 for property damage.

Size

Carry higher limits of liability than the state requires. When you buy liability insurance, it shows up as a split limit such as 50/100/25. This means that the insurance company pays a maximum of $50, 000 per person for each accident, $100,000 total for bodily injury and $25,000 for property damage. Single limit shows as a single number like $100,000. This means that the insurance company pays a maximum of $100,000 regardless of whether it is for bodily injury or property damage. One person could get the entire amount for bodily injury. Size is important here. If the damage is more than your company pays, you pay out of your pocket for the remaining portion.

Benefits

Add underinsured and uninsured motorist to your coverage. This covers bodily injury if the other driver doesn't have enough insurance or none at all. Most states require that you carry a minimum amount, but the additional cost is small to carry enough to pay all your bills if an uninsured driver hits you. If you're on the road a lot, you might consider towing or rental reimbursement coverage. The towing coverage reimburses the cost of taking your car to the shop for repair if you are stranded out in the middle of nowhere. Rental reimbursement pays for the cost of a rental car which is particularly important if driving is especially important for your line of work.

Resources

• CarInsurance.com tells more about types of auto insurance.