If you own a car…then you need to know about the different types of car insurance that exist! Picture the scene. You’ve just been in a car accident.
What’s the first thing you need to do? Time to call the insurance company.
But once you call your insurance you find out you’re not actually insured for half the things you thought you were! What went wrong? You didn’t do your homework.
The problem is, when you start looking into insurance, you’re hit with a ton of technical words. Liability, comprehensive, collision, uninsured, underinsured, and all the other lingo can feel mind-boggling.
But don’t worry. Read this complete guide on the different types of car insurance available, and you will feel ready for the road ahead.
Are you ready? Let’s ride on through!
Types of Car Insurance
The 7 main types of car insurance coverage options are:
- Liability Car Insurance
- Collision Coverage
- Comprehensive Insurance
- Medical Payments Coverage
- Uninsured Motorist Insurance
- Underinsured Motorist Insurance
- Towing and Labor Insurance
- Other Types Of Insurance
But what is comprehensive car insurance? What’s liability car insurance? And what are the other types of insurance available?
Let’s take a deeper look one by one.
Liability Car Insurance
Liability car insurance is a requirement in most states. Even if you don’t get any extras, you need this basic insurance. Without it, you’ll be driving illegally.
This basic liability car insurance may help to cover these two components:
- Damages to property (also known as Property Damage Liability)
- Another person’s injuries (also known as Bodily Injury Liability)
This may also cover your personal injuries, depending on the policy.
Collision coverage does exactly what it says on the tin. If you’re in an accident involving another vehicle, collision coverage may cover the cost of damages. They may also help to replace a vehicle if it’s totaled.
This may also include collisions not involving another vehicle, such as collisions with walls, trees, and fences.
This type of insurance is optional. But if you’re leasing or paying off a vehicle, the lender may require it.
What is comprehensive car insurance? This extra coverage helps to pay for repairs and damages up to the actual cash value of the vehicle. This insurance may provide extra coverage, not only when a collision occurs, but also in these instances:
- Adverse weather conditions
- Accidents involving animals
Of course, every policy is different. Make sure to check the fine print before assuming anything.
This is another one of the types of insurance that is optional. But, as with collision coverage, if you’re leasing or paying off a vehicle, the lender may require it.
Medical Payments Coverage
Out of all the types of car insurance, medical payments coverage is essential for keeping the costs down. Medical expenses following an accident can be extremely costly, especially if there are several people involved.
Medical payments coverage can help to pay for treatment related to injuries, including the following:
- Hospital visits
Different policies have different features. But the policy usually pays medical costs for the driver and passengers regardless of who’s fault it was.
The policy may also cover the insured individual when riding as a passenger in someone else’s vehicle, or if they receive injuries from a vehicle as a pedestrian.
In some states, this is a requirement. In other states, however, it’s an optional extra.
Uninsured Motorist Insurance
But what can you do if you’re in an accident with an uninsured driver, and it was their fault? Or what if it’s a hit-and-run? That’s where uninsured motorist insurance comes in.
If you’re hit by a driver who isn’t insured or in a hit-and-run incident, uninsured motorist coverage may help with some of your expenses, like vehicle repair or medical bills.
Underinsured Motorists Insurance
But what if you’re hit by a driver who has insurance but their liability limits don’t cover your expenses? That’s where underinsured motorist coverage comes in. Underinsured Motorist Coverage may help you to cover your expenses if their insurance is not enough to cover the cost.
Both uninsured and underinsured types of insurance are a requirement in some states and optional in others.
Towing And Labor Insurance
If you’re in an accident or your car won’t start, you may need to have it towed. The cost of towing is pretty hefty, and that’s not even including the labor charges!
Towing and labor insurance can reimburse you for towing and labor costs when you’re sending your vehicle for repairs. This is usually part of the comprehensive car insurance policy. But it’s always best to double-check.
Other Types Of Insurance
Some types of insurance coverage may also offer additional coverage to your policy. And while some may not offer it in their policy, you may be able to pay extra for these additional types of insurance:
- Rental reimbursement – Helps you to pay for transportation expenses, such as public transport fees or a rental car.
- Gap coverage – Helps to pay off your auto loan if your car’s stolen or totaled.
- New car replacement coverage – Extra protection for brand new cars.
- Sound system coverage – Replaces stolen or damaged sound system equipment.
- Classic car insurance – Insurance specifically for classic cars.
- Ride-sharing coverage – Coverage to protect cars used for personal and business purposes.
If any of these additions match your situation, speak with your insurance agent to find out what they offer.
Car Insurance—What’s the Big Deal?
As noted, in some states car insurance is mandatory. But in others, it’s not a requirement. So, what’s the big deal?
Every year there are 6 million car accidents in the US alone!
With those stats, it’s clear that insurance is vital. The bottom line is this: If you want to keep yourself, your passengers, and your vehicle safe, get insurance! Even if your state doesn’t require it.
Expect the Unexpected
Now you’re in the know-how, what’s next?
Time to find the right car insurance for you. But whatever you do, before you commit to a policy, always make sure to read the fine print. They all have different features, after all!
Our insurance policies at All Choice Insurance cover each of the types of car insurance mentioned above. So what are you waiting for? Expect the unexpected and contact us for a quote today!
I’m going to be getting a new car soon so I’ll have to get insurance for it. Of the types you listed here, it would be good to include liability and comprehensive. I’d for sure have liability since that would cover property damage and injury to others. I’ll also see about asking some questions to see if I want to add any others.
Callum! Congrats on the new car (in advance). We always suggest reaching out to a local independent insurance agent to go over the options for your individual situation. I hope the article was helpful!