Car insurance policies, unlike health insurance, are made up of several different types of insurance, each with its own costs and benefits. Drivers can usually choose different amounts of coverage for each part, so it’s important to know what kinds of insurance are best for you.
Car insurance with liability
When you are at fault in a car accident, liability insurance protects the other party financially. It provides two types of coverage: bodily injury (BI) and property damage (PD). BI covers expenses incurred as a result of injuries sustained in a mistake, whereas PD covers property damage. In most states, drivers must have liability insurance or demonstrate another form of financial responsibility in order to drive. This is to ensure that drivers who injure others or cause property damage can adequately compensate the other party.
Liability for serious harm
Because it is required in almost every state, bodily injury liability coverage (BI) is the most common type of auto insurance. It protects you if you cause an accident that injures or kills others. Your auto insurance company steps in to cover the other party’s medical bills, lost wages, or funeral expenses. If the other party decides to sue you in court, BI will pay your legal fees.
Property damage
Property damage (PD) insurance protects you against damage to someone else’s property. For example, if you lose control of your car and collide with a neighbor’s house, property damage insurance will cover the costs of repairs up to the policy limits. Similarly, if you rear-end someone’s car through no fault of their own, property damage insurance would cover the incident as well.
Car insurance for physical damage
Physical damage car insurance covers your repair costs if your vehicle is damaged in an accident or by a fallen tree branch. It is divided into two types of coverage: collision and comprehensive, which are distinguished by the circumstances surrounding the damage to your vehicle. These have a deductible, which typically ranges from $50 to $2,000, that you must pay before your coverage kicks in. Your premium is affected by the deductible you select, with higher deductibles resulting in lower premiums and vice versa.
Accident insurance
Auto insurance is an optional add-on to your insurance policy, but ValuePenguin suggest that you get it. Accident insurance will pay to fix your own car if you were the one who caused the accident. Even if you are the best driver in the world and didn’t cause the accident, you could still be found partly to blame. If that’s the issue, you might have to go to court to prove that it wasn’t your fault. In this case, your collision coverage will pay for the repairs to your car while the insurance company tries to prove your guilt and get their money back.
Complete safety
Comprehensive car insurance, commonly known as “other than damage” or “comp” insurance, protects against vandalism, theft, and natural disaster damage. Collision and comprehensive insurance accidents are both classified as “physical damage.” Comp insurance covers any physical damage to your car that is not covered by collision insurance. The idea that comprehensive insurance covers everything is a frequent misconception. No, it does not. It only covers car damage from non-collision incidents and does not cover stolen personal things like your wallet or car radio.
Renter’s insurance
Some insurance firms, such as AAA, provide liability insurance for rental cars. Check with your own insurer first before paying extra for the rental company’s car insurance. Keep in mind that this coverage is not the same as car rental reimbursement insurance, which is an optional coverage that pays for a temporary rental car while your automobile is being repaired.
