Almost all states require at least some level of car insurance for drivers. Usually, the minimum insurance requirement is liability coverage.
What is Liability Insurance?
It’s important to remember that the purpose of liability insurance is to pay for damage that is done to others. In the event of an accident, your liability insurance will pay for injuries to the other drivers involved and their vehicles. Liability insurance is sold in increments of coverage limits. For example, $15,000/$30,000 bodily injury liability coverage will pay the first $15,000 for one injured person and a total of $30,000 per accident. You are responsible for any amounts in excess of this coverage.
To insure yourself, your passengers, and your vehicle, other types of insurance are required.
Full Coverage Insurance Basics
There are many things to consider when purchasing auto insurance on a website. Of these variables, some are decided for you while others are choices that you will have to make.
If you have an outstanding loan on your car or you have a lease, you are required to maintain what is often referred to as “full coverage”. This level of insurance must be maintained until the loan or lease is paid off. The term, full coverage, is misleading because it implies that you’re covered for everything that can occur. This is not true.
Full coverage, among other things, protects the finance company by insuring the vehicle.
- Collision Insurance – If your car is destroyed (totaled) in an accident, the collision portion of full insurance coverage will pay the finance company the depreciated value of the car to satisfy the owner’s outstanding loan balance. Any amount in excess of the loan balance is returned to the owner. If the vehicle is damaged, but repairable, collision coverage pays for the repairs – less the policy’s deductible.
- Comprehensive Insurance – This type of coverage insures your car against damage that occurs from non-driving incidents. Examples of this include: damage caused by natural disasters, theft, vandalism, and flying debris. Comprehensive insurance often includes coverage for damage to windshields, but if it doesn’t, windshield repair coverage can be purchased separately.
- Liability Insurance – Full coverage also includes liability insurance.
Other Types of Coverage
Insurers offer many other types of coverage, which they often packaged together into plans.
- Uninsured Motorist – This insurance covers the policyholder for damages that would have been paid by the other driver’s liability coverage, if they had been covered. In some states, your comprehensive coverage will address this situation. In states where this is not the case, uninsured motorist coverage should be seriously considered in your auto insurance planning.
- Personal Injury Protection – If you are injured in an accident, this insurance will pay for your medical expenses. It also may provide you with lost income while you recover and reimbursement for other expense while you are on the mend.
- Rental Reimbursement – While your car is being repaired, you still need a way to get around. Rental reimbursement insurance does just as the name implies. It provides reimbursement for the rental car that you will use during the period that your damaged car is in the shop.
- Roadside Assistance – Stranded motorists with this type of coverage are covered for towing, labor, and other related charges.