The term “auto insurance” refers to several different insurance types that provide various forms of protection for cars and their drivers. Almost all states require drivers to carry auto insurance, and each state has needed minimum values for different policies. States can also impound vehicles if the driver is uninsured. However, keep in mind that it’s not necessarily a good idea to maintain only the minimum. If you are involved in an accident that causes a personal injury, you want to have the best coverage possible. An excellent way to determine how much coverage you need to have is to total the value of all of your assets. Your coverage should be equal to your assets’ value.
Here is a look at the different types of insurance:
- Liability Coverage for Bodily Injury
If you are found at fault in an accident where other drivers or passengers are hurt or killed, this insurance type will cover you.
- Liability Coverage for Property Damage
If your car causes damage to someone else’s vehicle, this insurance will cover you.
- Coverage for Collisions
Damage to your vehicle will be covered by insurance if you are found to be at fault. An older car may not merit having collision insurance; however, a relatively new and more expensive one will.
- Comprehensive Coverage
Comprehensive insurance provides coverage when your vehicle has damage caused by natural disasters, theft, or any other event outside of an accident. Note: both comprehensive and collision insurance payout based on what your car is currently worth, not what it cost when you bought it. Also, both of these policies will require that you pay an amount out of pocket. This amount is called a deductible.
- No-Fault Insurance
This type of insurance is required in a few states and pays out regardless of who was at fault.
- Personal Injury Protection (PIP)
If the driver or the passengers in your car are injured, PIP will pay for their treatment. Note that the costs that result from an accident can escalate rapidly, making this critical coverage to have. Not only can it cover medical expenses, but it may also cover wages lost because you were unable to work.
- Uninsured or Underinsured Motorist Coverage
While drivers are required to have insurance, the reality is that not all do. If you’re involved in an accident with someone who has no insurance or who doesn’t have enough, this can help to cover your costs. This type of insurance is usually not very expensive, especially when you consider the amount of protection it provides.
Shopping for Auto Insurance
Your driving record and credit will determine the policy that you’re able to get. There are three different types of insurers:
- Direct Sellers
These companies sell directly to you with no agent, which means that you may be able to save money by getting insurance from them. However, your driving history may be a problem if you’ve had accidents or moving violations.
- National Brands
These companies sell through exclusive local agents and may be willing to overlook a less-than-stellar driving record. The drawback is that the agents sell only for their parent company, which means that you’ll have to perform your research on the competition.
- Independent Insurance Agents
These agents offer insurance from multiple companies and may be able to get you insured even with a poor driving record or other issues that may make it difficult for you to get covered.
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