In life, there are many decisions you have to make and with all the available options for you to choose from, the process becomes even more complicated. The same is true with securing auto insurance. Unlike health insurance that only gives you a few options, making it easier for you to make up your mind, auto insurance has different types of coverage. You will need to analyze your options by knowing the benefits of each premium.
What are your auto car insurance options?
Liability Car Insurance
This type of insurance combines two types of coverage: Property Damage (PD) and Bodily Injury (BI). It can be used for covering financial damages during a car accident when you are at fault. Property Damage pays for the damaged caused to property while Bodily Injury pays for the medical expenses from injuries that the other parties sustained due to the accident. Most states will require you to secure liability coverage so you can drive. The insurance serves as protection in the event you end up getting into an accident which may result in damaging property or hurting others.
The Property Damage Insurance pays for the damage that you caused to an individual’s property. For instance, if you have no control over your car and you accidentally run into the house of your neighbor, the property damage insurance that you secured will cover the liability. Another scenario in which you can use liability insurance is hitting the rear-end of a car. Although a minimum PD coverage is enough, you need to consider increasing your premium if the damage has exceeded the liability minimum and you have to shoulder the excess amount.
Bodily Injury Liability
Bodily injury liability is the most common type of coverage under liability insurance. Most states require this insurance. With this type of liability insurance, injuries or death caused by an accident will be covered. The expenses covered will include lost wages, medical expenses, or funerals. Your insurance provider will cover the legal fees from court. When you secure a BI liability, you will be provided with protection which allows you to use your insurance for covering expenses. However, once you exceed the limits, you will have to pay the excess yourself. When assessing your BI liability limits, you have to consider the assets you are willing to risk and your budget.
Personal Injury Protection
Personal Injury Protection (PIP) might be similar to bodily injury insurance but there is a big difference when it comes to the coverage. With PIP, your insurance provider will pay for the medical expenses for you and your passengers in the event of a car accident. This type of insurance is also referred to as no-fault insurance because your injuries are covered regardless of who is at fault when you get into an accident. Aside from the medical expenses, PIP may also cover replacement household, childcare service expenses, and lost wages.
Physical Damage Car Insurance
This type of insurance comes in handy for vehicles that have been damaged by crashing into someone or by a fallen branch. The insurance will cover the costs for auto repair. There are two types of coverage that fall under the physical damage car insurance. These are comprehensive and collision, which are determined based on the circumstances that the car was under when it was damaged.
This type of insurance is known as Comp Insurance, and you use it when your car receives damage from natural disasters, theft, and vandalism. Although both collision and comprehensive coverage covers all physical damage, the comprehensive coverage has a broader scope than collision. It is also important to note that comprehensive insurance does not cover everything. Its scope includes car damages due to non-collision accidents. This coverage will not cover any stolen items during the incident.
This type of coverage is as an optional insurance rider. However, most insurance providers recommended including it in the policy. This insurance covers the repair costs for the damage to your vehicle if you are responsible for the accident. Even if you are trying to drive safely, accidents can sometimes be inevitable. Some accidents can lead you to face a lawsuit to prove that you were not at fault. The collision coverage will cover expenses for repairs. Your insurance provider will also try to prove your innocence.
Uninsured/Under Insured Motorist Coverage
Although most states require motorist to secure auto insurance liability protection, there are still some motorists who are uninsured or underinsured. If you are involved in an accident, you can make use of this low-cost coverage to cover some of the expenses that you have incurred when you got into an accident.
Uninsured Motorist Coverage
The coverage pays for the financial costs for the damages or injuries caused by an uninsured motorist. Most states consider driving without some form of insurance illegal. However, accidents that involve uninsured drivers are inevitable. When you face property or medical-related expenses and your financial resources are within a limit, this coverage will fill the gap.
Under Insured Motorist Coverage
In cases the driver is at fault, the insurance may not be enough to pay for the damage. There are cases when the claims have already exceeded the limits. More often than not, the driver does not have the financial capacity to pay for the expenses which the accident has incurred. The under insured motorist coverage will reduce the risk and cover the balance of medical bills and other expenses.