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Understanding the Five Types of Car Insurance

Let’s all admit it: car insurance just isn’t very exciting. No matter your background, your hobbies, or your interests, most people can agree that car insurance just isn’t something to spend much time thinking about. Though seemingly harmless, this collective agreement that car insurance is boring can lead to serious missteps when shopping for coverage, and ultimately harm you when it comes time to file a car accident claim for your injuries. Understanding the different kinds of car insurance and their limits can save you money and ensure you have enough coverage in case of an accident.

Most states have a required minimum amount of car insurance coverage in order to legally drive your car. Even if you opt to purchase the minimum amount of coverage, it’s important to understand the fine print of what you’re buying. After understanding exactly what you’re buying, you may find that you need more coverage than the minimum required. While no one likes to pay for more than what they need, it’s also not a good idea to be caught empty-handed in case of an emergency. Fail to have enough coverage in an accident and you could be stuck paying for repairs and medical bills out of pocket. Insurance experts at The Zebra state “an at-fault accident raises insurance premiums an average of 46% nationally, a speeding ticket between 20-30%, and a DUI nearly 80%. The best things consumers can do to lower their insurance rates are to maintain continuous coverage, maintain a clean driving record, and to shop around for quotes every six months or year to ensure they’re getting the right coverage at the best price for their changing needs.”

Property Damage Liability

Considered mandatory in most states, this kind of car insurance pays for damage caused to other vehicles should you be involved in a collision for which you are legally responsible. Property damage liability insurance is the bare minimum level of coverage any driver should have, because if and when you are ever involved in an accident, you’ll be stuck footing the bill for repairs to the other vehicle. This coverage doesn’t include any repairs to your own vehicle, nor does it include any medical costs.

When determining exactly how much property damage liability coverage to get, it helps to consider all the other cars you pass on the road every day. In a worst case scenario, if you find yourself responsible for totaling someone else’s brand new sports car, will you have enough insurance coverage to pay for the repairs or replacement vehicle? If the answer is no, you may want to consider bumping up to the next level of coverage.

Bodily Injury Liability

If you cause an accident that sends someone to the hospital, this is the kind of insurance coverage you’ll be most thankful to have. It helps cover payments associated with injuries and deaths that occur in accidents for which you were legally responsible. Such insurance coverage can also be used to help pay for your legal defense. Considering how expensive both medical bills and legal fees can be, this is one kind of insurance not to skimp out on.

Uninsured Motorist Coverage

Though insurance is legally required in most states, not everyone respects these requirements. Because you never know when you might find yourself involved in a collision with an uninsured driver, uninsured motorist coverage is critically important. Should you get involved in a crash caused by a driver who does not have insurance coverage, your own uninsured motorist coverage will pay for you and your passengers’ medical bills. In some cases, this kind of coverage can also be extended to the damage done to your vehicle, too. While you may never find the need to use such insurance, skipping out on uninsured motorist coverage is never a good idea.

Collision Coverage

Should you get involved in a car accident, this kind of insurance will cover the repairs for your vehicle’s damages. Subject to a deductible, collision coverage can be a lifesaver for anyone driving a halfway decent car. Imagine, for example, you just bought a new car. On your way home from the dealership, you find yourself in an accident. Thousands of dollars of damage can be covered by your insurance – if you have collision coverage, that is. When shopping for collision coverage, it’s important to keep your vehicle’s value in mind. Older vehicles that have a relatively low value may have no use for collision coverage, as the deductible may be worth more than the car itself.

Comprehensive Coverage

If a tree falls on your car, will you be stuck paying for the repairs? If you don’t have comprehensive coverage, odds are good that you will be writing a hefty check at the mechanics. In addition to the kinds of damage done in the average collision, comprehensive coverage will pay for damages caused by fires, vandalism, acts of nature, theft and even collisions with animals. Typically subject to a deductible, this kind of car insurance is often required for vehicles that have been financed.

Not everyone needs every kind of car insurance. If you’re not sure which coverage makes the most sense for your needs, talk with insurance companies to get a better understanding of your options. Many companies offer free quotes for their services, allowing you to shop around and compare prices. Arm yourself with information and you’ll be prepared for any kind of emergency that comes your way.