Automobile insurance comes in different forms. And as expected, each insurance varies in premium amount and the extent of liability covered.
It is therefore important to understand all the possible types of car insurance so that you can determine which one is the most ideal for you. In this post, we shall discuss the 11 most common types of auto insurance.
1. Liability Coverage
This is one of the most common car insurance covers that is a basic legal requirement for most states and countries. In liability insurance, you pay for coverage on damages for bodily injury as well as damage to property.
It is important to remember that though it covers bodily harm and damage to property caused by your car, liability coverage does not actually cover the car itself. So in order to avoid huge repair costs, it is imperative you cover your car under another insurance policy.
2. Comprehensive Coverage
This insurance covers any damage that is caused to your car from any other factors other than car collision. Some of these damages range from theft of the car, accidents triggered by animals and car vandalism, to falling debris and fires.
Civil insurrections, explosions and turbulent weather conditions such as hail damage are also covered under the comprehensive insurance policy.
3. Collision Cover
One major benefit with collision insurance is that it covers any damage that occurs to your vehicle without really considering who was at fault. Some of the accidents covered here include collision with another car or object, getting hit by another car or if your vehicle happens to roll over.
As the extent of liability is higher under collision insurance covers, you should expect the premium to be proportionately high as well.
4. Gap Insurance
This is an insurance cover where the insurance company pays for a settlement in the event a car is stolen and unrecovered, or is totaled during an accident. It is important to remember that the settlement is usually based on a computation of your car’s actual cash-value as opposed to the amount you initially paid for the car.
Insurance companies, through their assessors, will normally evaluate the value of your car depending on depreciation principles. Gap insurance is arguably designed to benefit insurers as it does not factor in any loans you might have taken to purchase the car.
5. Towing & Labor Coverage
This is an insurance that offers reimbursement for any towing expenses incurred from the location where the vehicle stopped to a spot where it is safe to drive the car. One advantage of towing coverage is that the premiums and other charges are easier to project given the fact that towing companies charge mile-based rates.
However, it is important to remember that towing coverage only makes sense when you already have a comprehensive coverage.
On the other hand, labor coverage covers all repair costs incurred on the site where the car broke down. Such repairs include some delivery services and installation of parts required to assist with towing away the vehicle.
6. Rental-reimbursement coverage.
This is a coverage you need to pay for a rental space in the event your vehicle is involved in an accident and where it is difficult to tow the vehicle away and have it repaired in some garage. There are several reasons why your vehicle could stay on the accident spot for much longer.
First, if it is impossible to tow it away without doing some servicing and repairs to it. And secondly, if you have an insurance cover requiring the vehicle to stay in the accident scene for much longer.
7. Uninsured Motorist-Coverage
This is the insurance coverage that covers damages caused to your car through a collision by an uninsured car. Damages covered could range from ensuing medical expenses caused by bodily harm to you as well as other passengers aboard, to loss of income.
In order to make it work, it is important to pair Uninsured Motorist-Coverage with Underinsured Motorist-Coverage.
8. Underinsured Motorist-Coverage
This is a cover that protects you from other motorists who are not fully protected. It differs slightly from uninsured motorist-coverage. As we have already seen, uninsured motorist-coverage covers you when the other motorist is not insured at all.
However, with underinsured motorist-coverage, the other motorist may have taken some minimal insurance to minimize liability. It may happen that damage to other vehicles is not one of the liabilities their insurance covers, which leaves you exposed in the event their car collides with yours.
9. Medical Payments-Coverage
As the name suggests, this is an insurance cover you take to cushion you from high medical costs resulting from an accident. This coverage applies to both the driver and the passengers aboard. Depending on your insurance company, medical payments-coverage could range from ambulance bills to doctor visits and any prescribed medical treatments.
As a motorist, you hope you never have to get involved in an accident, less so one that causes grievous bodily harm. And when it happens, you may think your health insurance is sufficient to cover all the hospital bills. Well, in some cases, your health insurance may not be so adequate and even when it is, how about the health of the passengers aboard? This is where the medical payments-coverage comes in.
10. Personal Injury Protection-Insurance
This type of auto insurance helps mitigate the financial implications that result from a car accident. One advantage of PIP insurance cover is that it is mostly a �’no-fault’’ cover.
This means that in the event of an accident, the policyholder receives compensation for damages regardless of whether the other motorist was insured or not. Even better, damages are awarded to the policyholder as well as other passengers aboard their car. Usually, PIP may partly meet medical expenses, rehabilitation and funeral costs to the victims.
11. Classic Car Insurance
As the name suggests, this is insurance that covers damages caused to your classic car. Classic car insurance is commonly lauded for its remarkably lower premiums as compared to standard cars.
Also, most insurance companies allow you to choose a repair shop of your choice. Of course, there are not as many classic car repair shops as there are repair shops for standard cars. Therefore, it is important to choose a shop that specializes in your car type.
The above are some of the most common auto insurance covers. Needless to mention, it is important to do some homework on an insurance company before settling on it.
Do not just settle for a company charging lower premiums, ensure it has been in the industry long enough to have established a solid reputation.