Typical Types of Auto Insurance
Auto insurance is more than just the premium you pay and the deductible. Each state has its own laws regarding the type and amount of coverage required. Additional types of insurance coverages may be added to your policy to protect yourself, your passengers, the car and anyone who was injured in an accident. Many types of auto insurance cover a wide range of situations and accidents that may occur.
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Property Damage Liability
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Called PD, PDL or liability insurance, property damage liability auto insurance covers any damage to another vehicle or other property, such as fences or buildings, in an accident in which you are legally responsible. This coverage type is mandatory in many states, and many states will also enforce a minimum coverage amount. However, it is advisable to carry higher than the minimum coverage amount as it is difficult to estimate the damage your vehicle may cause in an accident. You will be personally responsible for any damages that exceed the liability coverage.
Bodily Injury
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Bodily injury insurance covers the costs of medical expenses, lost wages and funeral expenses, as well as pain and suffering damages for individuals who were injured in an accident in which you were at fault. The bodily injury policy may also help pay for your legal defense fees if you are taken to court. The insurance is required in most states, and often has minimum coverage requirements. It is advisable to keep a high coverage amount on all vehicles you drive to protect your personal assets from being seized, as bodily injury claims can be extremely expensive.
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Collision Insurance
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Collision insurance covers the damages caused to your own car in an accident for which you are responsible. This type of coverage is typically required if there is a loan on the vehicle. You are required to pay a deductible before your insurer pays out any claim. If the cost of repairs exceeds the value the vehicle had prior to the accident, the insurance company will deem it a total loss and pay you the value of the vehicle -- minus your deductible -- instead of paying for repairs. This coverage adds to the overall cost of your monthly premium. If your car is older, this type of coverage may not be necessary.
Comprehensive
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Collision insurance covers your car if it is in an auto accident. However, there are many other types of damage that can occur when your vehicle is not on the roadway that are not covered under collision. Comprehensive insurance covers your vehicle in these cases. Items that are covered under comprehensive policies may include fire, theft, wind, hail, flood, vandalism and accidents involving animals. Deductibles may also apply to comprehensive coverage before claims are paid.
Uninsured and Underinsured Motorist
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While it is a legal requirement to have auto insurance in most states, there are many people who ignore the law and drive without insurance. This type of insurance covers you and your passengers in case you’re in an accident where an uninsured driver is at fault. Different types of uninsured motorist coverage may cover medical expenses and may even cover damages to the car. Underinsured motorist coverage is a similar type of insurance that covers you and your passengers in cases where the other party's insurance is too low to cover the damages.
Personal Injury Protection
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Personal injury protection -- sometimes called medical payment insurance -- covers both you and your passengers' medical expenses incurred in an accident whether or not you are at fault. The coverage will pay for expenses related to medical bills along with rehabilitation, funeral costs, lost wages and even replacement costs such as child care. This type of coverage is optional in most states; if you have a good health insurance plan, it may not be necessary.
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References
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