When it comes to car insurance, there are several categories and tiers of coverage to consider before purchasing what is best for you. Sometimes, all these different sections to choose from can get confusing to consumers, but becoming informed will make you a smarter consumer and will most likely save you some money! Let’s run through a list of the various types of coverage that you can have in your auto insurance policy.
Liability Coverage: Liability covers other people’s medical and vehicle expenses after an accident, and there are actually two types of this coverage: Property damage liability covers repairs, such as a dented door, and bodily liability covers doctor’s visits and physical therapy. Liability coverage does not cover your own injuries or damaged car, but the others involved in the accident. Commonly, drivers must have both types of liability insurance in most states.
Comprehensive Coverage: This covers replacement or repair of your vehicle if something other than an auto accident happens. If a tree falls on your car, or hail dents the exterior, comprehensive coverage covers the damage, but no medical expenses are covered with this one.
Personal Injury Protection Coverage: Also called no-fault coverage, it covers any medical costs of the policyholder, as well as anyone else in the car at the time of an accident, regardless of whose fault it is. It even goes so far as to cover rehab, childcare if it’s needed while you recuperate, and funeral costs. PIP coverage is often required for policyholders to have.
Collision Coverage: Collision handles your vehicle’s repairs if you hit an object or another car, but does not cover damage from natural disasters. It’s important to note that it covers you in any car you drive, even rentals in some states, a friend’s car, or a brand-new car you’re driving home from the lot.
Uninsured or Underinsured Motorist Coverage: This protects you when you get into an accident with someone who doesn’t have enough or any insurance, and you need a way to cover repair costs and medical bills. Some states require drivers to have uninsured motorist coverage.
Auto Medical Payments (MedPay): This is optional coverage and is similar to PIP, but more limited in its reach. It takes care of medical expenses from an accident for you, any passengers in your car, household members, and other policyholders. It supplements health insurance for people who don’t have it and can pay for copays and deductibles of other insurance policies, like PIP and health insurance.
A few more optional coverage types to note are guaranteed auto protection (GAP), which covers the cost “gap” between the remainder of financing and what the car is actually worth; flood insurance, which is important if your home is in a floodplain and covers damage to your car, home, and other personal property (but comprehensive car insurance does cover flood damage to just your car); and emergency roadside assistance that provides assistance if you lock your keys in the vehicle, need a tow or jump, run out of gas, or get a flat car.