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Common types of car insurance coverage

Several types of car insurance coverage can be included in a car insurance policy. Some common types of coverage include:

Common types of car insurance coverage


  • Liability coverage: This coverage pays for damages or injuries that you are legally responsible for if you cause an accident. There are two types of liability coverage: bodily injury liability and property damage liability.


  • Collision coverage: This coverage pays for damages to your vehicle if you are involved in an accident, regardless of who is at fault.


  • Comprehensive coverage: This coverage pays for damages to your vehicle from non-collision events, such as theft, natural disasters, or vandalism.


  • Medical payments coverage: This coverage pays for medical expenses for you and your passengers if you are involved in an accident, regardless of who is at fault.


  • Personal injury protection (PIP): This coverage, which is required in some states, pays for medical expenses, lost wages, and other related expenses for you and your passengers if you are involved in an accident, regardless of who is at fault.


  • Uninsured/underinsured motorist coverage: This coverage protects you if you are in an accident with a driver who does not have insurance or does not have enough insurance to cover the damages.


  • Gap coverage: If you have a loan or lease on your vehicle, this coverage pays the difference between the actual cash value of your vehicle and the amount you owe on your loan or lease if your vehicle is totaled in an accident.



The most common types of car insurance


The most common types of car insurance coverage are liability, collision, and comprehensive coverage.


  1. Liability coverage: This coverage pays for damages or injuries that you are legally responsible for if you cause an accident. There are two types of liability coverage: bodily injury liability and property damage liability.
  2. Collision coverage: This coverage pays for damages to your vehicle if you are involved in an accident, regardless of who is at fault.
  3. Comprehensive coverage: This coverage pays for damages to your vehicle from non-collision events, such as theft, natural disasters, or vandalism.


It is important to note that the specific types of coverage required by law vary by state. It is a good idea to check with your state's insurance department or a local insurance agent to determine the specific coverage requirements for your state.


Common types of car insurance coverage


Liability insurance


Liability insurance is a type of car insurance coverage that pays for damages or injuries that you are legally responsible for if you cause an accident. There are two types of liability coverage: bodily injury liability and property damage liability.


Bodily injury liability coverage pays for medical expenses and other related expenses for the individuals involved in the accident, including passengers in your vehicle, pedestrians, and drivers and passengers in the other vehicle.


Property damage liability coverage pays for damages to the property of others, including the other vehicle and any other structures or objects damaged in the accident.


Liability insurance is required by law in most states. The minimum liability coverage required by law varies by state, so it is a good idea to check with your state's insurance department or a local insurance agent to determine the specific coverage requirements for your state.



Bodily injury liability (BI)


Bodily injury liability (BI) is a type of car insurance coverage that pays for medical expenses and other related expenses for the individuals involved in an accident, including passengers in your vehicle, pedestrians, and drivers and passengers in the other vehicle.


BI coverage also pays for lost wages and legal expenses if you are sued as a result of an accident.


BI coverage is typically expressed as a limit per person and a limit per accident. For example, if your BI coverage limit is $50,000 per person and $100,000 per accident, and you are involved in an accident where you are found to be at fault, your insurance company will pay up to $50,000 in medical expenses for each person injured in the accident, up to a maximum of $100,000 for all people injured in the accident.


BI coverage is typically required by law in most states. The minimum BI coverage required by law varies by state, so it is a good idea to check with your state's insurance department or a local insurance agent to determine the specific coverage requirements for your state.


Common types of car insurance coverage


Property damage liability (PD)


Property damage liability (PD) is a type of car insurance coverage that pays for damages to the property of others, including the other vehicle and any other structures or objects damaged in an accident.


PD coverage is typically expressed as a limit per accident. For example, if your PD coverage limit is $50,000 per accident and you are involved in an accident where you are found to be at fault, your insurance company will pay up to $50,000 in damages to the other party's property.


PD coverage is typically required by law in most states. The minimum PD coverage required by law varies by state, so it is a good idea to check with your state's insurance department or a local insurance agent to determine the specific coverage requirements for your state.



Uninsured and underinsured motorist bodily injury coverage (UM/UIM)


Uninsured motorist bodily injury coverage (UM) and underinsured motorist bodily injury coverage (UIM) are types of car insurance coverage that protect you and your passengers if you are in an accident with a driver who does not have enough insurance to cover the damages.


UM, the coverage pays for medical expenses and other related expenses for you and your passengers if you are hit by an uninsured driver.


UIM coverage pays for medical expenses and other related expenses if you are hit by a driver who does not have enough insurance to cover the damages.


UM, and UIM coverage is typically expressed as a limit per person and a limit per accident. For example, if your UM/UIM coverage limit is $50,000 per person and $100,000 per accident, and you are involved in an accident where the other driver is at fault and does not have enough insurance to cover the damages, your insurance company will pay up to $50,000 in medical expenses for each person injured in the accident, up to a maximum of $100,000 for all people injured in the accident.


UM and UIM coverage is not required by law in all states, but it is available in most states. It is a good idea to check with your state's insurance department or a local insurance agent to determine if UM and UIM coverage is available in your state and to understand the specific coverage requirements and options.



Vehicle coverage


Vehicle coverage is a term that generally refers to car insurance coverage that pays for damages to your vehicle. There are several types of vehicle coverage:


  1. Collision coverage: This coverage pays for damages to your vehicle if you are involved in an accident, regardless of who is at fault.
  2. Comprehensive coverage: This coverage pays for damages to your vehicle from non-collision events, such as theft, natural disasters, or vandalism.
  3. Gap coverage: If you have a loan or lease on your vehicle, this coverage pays the difference between the actual cash value of your vehicle and the amount you owe on your loan or lease if your vehicle is totaled in an accident.


It is important to note that the specific types of coverage required by law vary by state. It is a good idea to check with your state's insurance department or a local insurance agent to determine the specific coverage requirements for your state.



Collision (COLL)


Collision coverage is a type of car insurance coverage that pays for damages to your vehicle if you are involved in an accident, regardless of who is at fault.


Collision coverage typically pays for damages to your vehicle resulting from a collision with another vehicle or object, such as a tree or a guardrail.


Collision coverage is typically expressed as a deductible, which is the amount you will pay out of pocket before your insurance company pays the remainder of the claim. 


For example, if you have a $500 deductible and your vehicle sustains $3,000 in damages in an accident, you will pay the first $500 of the damages and your insurance company will pay the remaining $2,500.


Collision coverage is not required by law in all states, but it is often required by lenders if you have a loan or lease on your vehicle. 


It is a good idea to check with your state's insurance department or a local insurance agent to understand the specific coverage requirements and options for your state.



Comprehensive (COMP or OTC)


Comprehensive coverage, also known as "other than collision" (OTC) coverage, is a type of car insurance coverage that pays for damages to your vehicle from non-collision events, such as theft, natural disasters, or vandalism.


Comprehensive coverage typically pays for damages to your vehicle resulting from events that are not caused by a collision with another vehicle or object.


Comprehensive coverage is typically expressed as a deductible, which is the amount you will pay out of pocket before your insurance company pays the remainder of the claim. 


For example, if you have a $500 deductible and your vehicle sustains $3,000 in damages in a non-collision event, you will pay the first $500 of the damages and your insurance company will pay the remaining $2,500.


Comprehensive coverage is not required by law in all states, but it is often required by lenders if you have a loan or lease on your vehicle. It is a good idea to check with your state's insurance department or a local insurance agent to understand the specific coverage requirements and options for your state.



Uninsured motorist property damage (UMPD)


Uninsured motorist property damage (UMPD) is a type of car insurance coverage that pays for damages to your vehicle if you are in an accident with an uninsured driver.


UMPD coverage pays for damages to your vehicle resulting from an accident with an uninsured driver who is at fault.


UMPD coverage is typically expressed as a limit per accident. For example, if your UMPD coverage limit is $5,000 per accident and you are involved in an accident where the other driver is at fault and does not have insurance, your insurance company will pay up to $5,000 in damages to your vehicle.


UMPD coverage is not required by law in all states, but it is available in most states. It is a good idea to check with your state's insurance department or a local insurance agent to determine if UMPD coverage is available in your state and to understand the specific coverage requirements and options.



Personal injury protection (PIP)


Personal injury protection (PIP) is a type of car insurance coverage that pays for medical expenses, lost wages, and other related expenses for you and your passengers if you are involved in an accident, regardless of who is at fault.


PIP coverage typically covers a wide range of expenses, including medical treatment, rehabilitation, funeral costs, and lost income. Some PIP policies also cover expenses such as child care and household services if you are unable to perform them due to an accident.


PIP coverage is typically expressed as a limit per person and a limit per accident. For example, if your PIP coverage limit is $50,000 per person and $100,000 per accident, and you are involved in an accident, your insurance company will pay up to $50,000 in medical expenses for each person injured in the accident, up to a maximum of $100,000 for all people injured in the accident.


PIP coverage is required by law in some states and is optional in others. It is a good idea to check with your state's insurance department or a local insurance agent to determine if PIP coverage is required or available in your state and to understand the specific coverage requirements and options.



Gap insurance


Gap insurance, also known as "guaranteed asset protection" (GAP) coverage, is a type of car insurance that pays the difference between the actual cash value of your vehicle and the amount you owe on your loan or lease if your vehicle is totaled in an accident.


If you have a loan or lease on your vehicle, the actual cash value of your vehicle (the amount it is worth) may be less than the amount you owe on your loan or lease. 


If your vehicle is totaled in an accident, your insurance company will pay the actual cash value of the vehicle, which may not be enough to pay off your loan or lease. 


Gap insurance pays the difference between the actual cash value of the vehicle and the amount you owe, so you do not have to pay the remaining balance out of pocket.


Gap insurance is not required by law, but it is often required by lenders if you have a loan or lease on your vehicle. It is a good idea to check with your lender or a local insurance agent to understand the specific coverage requirements and options.



New car replacement


New car replacement is a type of car insurance coverage that pays for a brand-new vehicle if your vehicle is totaled in an accident.


New car replacement coverage typically applies to vehicles that are less than one year old and have less than 15,000 miles on them. 


If your vehicle meets these criteria and is totaled in an accident, your insurance company will pay for a brand-new vehicle of the same make and model as your totaled vehicle.


New car replacement coverage is not required by law, but it is often available as optional coverage for an additional premium. It is a good idea to check with your insurance company or a local insurance agent to understand the specific coverage requirements and options.



Roadside assistance coverage


Roadside assistance coverage is a type of car insurance coverage that pays for services to help you if your vehicle breaks down while you are driving.


Roadside assistance coverage typically includes services such as towing, battery jump-starts, tire changes, and fuel delivery. Some roadside assistance programs also include services such as trip interruption coverage, which pays for expenses such as meals and lodging if you are stranded more than a certain distance from home.


Roadside assistance coverage is not required by law, but it is often available as optional coverage for an additional premium. It is a good idea to check with your insurance company or a local insurance agent to understand the specific coverage requirements and options. Some car manufacturers also offer roadside assistance as part of the vehicle's warranty.



Rental car coverage


Rental car coverage is a type of car insurance coverage that pays for the cost of a rental car if your vehicle is in the shop due to an accident, theft, or other covered loss.


Rental car coverage typically pays for a rental car while your vehicle is being repaired or while you are waiting for a claim to be processed in the case of a theft. 


Some rental car coverage policies also pay for a rental car if your vehicle is totaled in an accident and you are waiting for a settlement or the delivery of a new vehicle.


Rental car coverage is not required by law, but it is often available as optional coverage for an additional premium. It is a good idea to check with your insurance company or a local insurance agent to understand the specific coverage requirements and options. Some credit card companies also offer rental car coverage as a benefit for cardholders.



How to find the best coverage for me


Here are a few steps you can take to find the best coverage for your needs:


  1. Determine your coverage needs: Consider your circumstances and the type of vehicle you own to determine the coverage you need. For example, if you own a new car with a loan, you may need more coverage than if you own an older car that is paid off.
  2. Compare quotes from multiple insurance companies: Shop around and get quotes from multiple insurance companies to compare prices and coverage options. Don't just focus on the price; make sure to compare the coverage options and limits offered by each company.
  3. Look for discounts: Many insurance companies offer discounts for things like having a good driving record, bundling multiple policies, or having safety features on your vehicle. Ask about any discounts you may be eligible for to help lower your premium.
  4. Understand your policy: Be sure to read and understand your policy before you purchase it. Make sure you understand what is and is not covered, and what your policy's limits and deductibles are.
  5. Review your coverage regularly: Your insurance needs may change over time, so it is a good idea to review your coverage regularly to make sure it still meets your needs. If you have any significant life changes, such as buying a new car or moving to a new state, be sure to update your insurance policy accordingly.


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