The Different Types of Car Insurance

by Emma

When you are shopping for car insurance, you may be unsure of what type of insurance you need and the difference in prices for different kinds of insurance. If you have a new car with a loan, you may be required to pay full coverage. If you own your car outright, you may choose to save money with the minimum required insurance in your state. Knowing what insurance option is best for you and your vehicle means understanding the different types of insurance.

Regardless of the type of car insurance you choose, you will have a premium that you will need to pay every month. You will also have a deductible amount to pay if you are in an accident and utilize your insurance. The higher your deductible, the lower your monthly premium is going to be. When comparing insurance options, it is critical to look at both premiums and deductibles to make a fair comparison of cost. You will also need to know exactly what is covered under the insurance policy to ensure you compare actually comparable plans. Read on to learn about the five most common types of car insurance and the coverage options they provide.

Liability Insurance

Liability car insurance is considered minimum coverage in most states. This means you are required to have it to be driving legally. Liability covers the cost of damages and physical injuries to people and property if you are at fault for the accident. Liability insurance is generally required by law to protect other drivers. If you are at fault for an accident, the other driver is left with bills to pay to repair or replace their vehicle, not to mention potential medical bills to cover. This motorist coverage will also cover medical expenses for the people in the other vehicle if you are at fault.

Collision Insurance

Collision Insurance

Collision car insurance covers the cost of repairs or replacement for your car if you are in an accident. When deciding if you should pay for collision insurance above and beyond your liability insurance, you need to determine if you can afford to repair or replace your car if you are in an accident. If you can’t, the cost of collision insurance is justified. The alternative is being forced to go without a vehicle after being in an accident if the accident is your fault or the other person does not have adequate insurance.

Comprehensive Insurance

Comprehensive Insurance

Comprehensive car insurance is going to have the highest premium, but it also covers the most. Comprehensive will cover your vehicle’s damage due to an accident with another vehicle, an accident with an animal, vandalism, or a natural disaster. Your car insurance company will give you an auto insurance quote for your premium based on your driving record, how much coverage you need, your credit history, and the type of vehicle you drive. Depending on these factors and others, there may be discounts available to you. Still, you need to ask the insurance company about any potential discounts when you get your car insurance quote.

Gap Insurance

Gap Insurance

When a vehicle is totaled in an accident, gap insurance will cover the difference between the vehicle’s value and what is left on the car loan. If you do not have the bank’s money to pay off your car loan should the need arise, this is a necessary expense. While ideally, there won’t be a difference between those two amounts, depreciation makes it likely.

Uninsured or Underinsured Motorist Insurance

Uninsured or Underinsured Motorist Insurance

This insurance will cover damage to your vehicle if you are in an accident with someone who doesn’t have insurance, doesn’t have adequate insurance, or skips the scene immediately following the accident. Uninsured and underinsured motorist insurance is important because there are so many things you can’t control in life. Whether or not other people are driving illegally is one of those things.

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