What type of car insurance is the right one for you?
One of the most crucial decisions you’ll have to make when shopping for auto insurance is the type of car insurance to choose.
Since all types of car insurance come with several different perks, choosing just one or two is a tricky decision to make.
In this article, I’m going to show you all the different types of available car insurance, the benefits of each insurance policy and what they cover, the best type of auto insurance, its benefits, and why it should be the right option for you.
But why exactly should anyone bother about buying auto insurance?
Car insurance offers financial protection against physical injury and/or physical damage caused by vehicle accidents or collisions and against specific
Car insurance also provides financial protection against loss and damage to your vehicle caused by other things other than vehicle accidents or collisions.
Despite the significance of car insurance, it is not mandatory in every state in the U.S.
Some states such as Pennsylvania, New Hampshire, Alabama, Mississippi, and Iowa, etc. all have financial responsibility laws that mandate car owners to post a bond, an approved self-insurance or cash deposit with their state to cover damages whenever such need arises.
However, car owners in states where auto insurance is mandatory must provide proof of insurance during their vehicle registration and could be required to carry the documents along in their vehicles always.
In the United States, buying car insurance is a bit more complex compared to several other countries across the world.
Odds are you’ll have to consider the benefits of several different policies and coverages before settling for the one that matches your insurance need.
Car Insurance Types
1.No-fault Car Insurance
No-fault insurance is otherwiseknown as Personal Injury Protection (PIP). Up to 25 states, as well as theDistrict of Columbia, have some form of no-fault insurance law.
The PIP means that if you’re affected in an accident, you have the right to claim certain limits from your insurance company for whatever injury you sustained during the accident instead of going to court to prove that the other party should be held responsible.
However, in other states without no-fault laws, if you’re involved in an
However, compensation is made onlyif it can be proved beyond reasonable doubts that the other driver was thecause of the accident.
Once you can prove that you weren’t to blame and can do so through witnesses or a police prosecution of the other driver, it’s your responsibility to inform your insurance company or you may end up losing your good driver (no-claims) discount.
2.Under-insured Motorist Insurance
The under-insured motorist insurance is comparable to the uninsured motorist cover and protects you when another motorist has caused an accident but has insufficient insurance to offset the costs of the damages to property or injury.
However, if such a motorist has sufficient asset, you can sue him or her.
3.Collision Car Insurance
This type of policy covers damage you caused to your own vehicle regardless of who is responsible for the damage.
Collision cover often comes with a deductible. So the more the deductible the lower the premium you’re required to pay.
The make and model of your car, as well as its value are some of the key things you’ll have to consider to make up your mind if you need a collision cover or not.
Many automobile loans and leasing companies often ask for a comprehension and a collision cover.
If you have collision insurance, you wouldn’t have to bother about having motorist insurance.
4.Miscellaneous Extra Insurance
If you’re always using rented vehicles, you should consider a
5.Comprehensive Car Insurance
This type of auto insurance protects vehicle owners against loss or damage to their vehicle as a result of fallen objects, riots, accidental gas leakages, theft, fire, collision, vandalism, earthquakes, storms, animals, floods, explosion, and storms etc.
The comprehensive auto insurance doesn’t cover you against accidents that
involve other vehicles or objects for which you need other types of cover.
However, a comprehensive cover often has a lower excess than a collision cover.
Comprehensive auto insurance is seen as the best auto insurance deal. In fact, while the comprehensive auto insurance policy covers and pays for only some problems, other typical auto insurance policies
So what are the key things comprehensive auto insurance pay for?
5 Benefits of Comprehensive Auto Insurance
Reimbursement for stolen car
If your car is stolen, standard comprehensive auto insurance will compensate you totally for the present value of the stolen vehicle.
While the reimbursement could be lower than the price you bought the vehicle, it is far better than getting nothing at all.
Also, your lender will ask for your insurance policy if you have financed the vehicle.
Reimbursement for flood damage
Water can damage some parts of your car, especially the upholstery and mechanical parts. Worst still if the water level is extremely high, the damage might be deemed totaled.
But with a comprehensive auto insurance coverage, you’ll have nothing to worry about if
But if you think where you live is flood free, think again!
According to the National Flood Insurance Program, up to 20% of flood insurance claims are made from locations rated as low or moderate risk.
Compensation for fire damage
If you’re involved in a roadside fire, your comprehensive auto insurance company will hand you a check.
Even more, damages as a result of huge pile-ups, fallen trees or fallen tree branches and other incidents such as vandalism are paid for when you have a comprehensive auto insurance policy.
Compensation for weather damage
Several things can damage your car due to bad weather. Heavy winds can throw around big objects that can leave a dent in your car or even damage your windshield.
A tornado can also toss your vehicle across several houses down the street leaving it completely damaged.
With a comprehensive auto insurance coverage, your insurer wouldn’t hesitate to hand you a check for the value of your vehicle if it is partially or completely damage by a weather-related incident.
Payment for animal collision
Typical car insurance
This auto insurance pays for damages that are caused as a result of collision with animals including a damaged fender, smashed windshield or even a dented hood.
How comprehensive auto insurance payments are calculated
Regardless of what triggers a comprehensive claim, your insurance service provider will cut the amount it reimburses for your claim by your deductible, which
You can check your auto insurance policydeclaration page to ascertain the exact amount of your deductible.
It is noteworthy to mention that if your caris totaled, you’ll be reimbursed with what the car was valued at prior to theincident that led to the damage, minus the deductible.
This simply indicates that the value of acomprehensive auto insurance decreases as the insured vehicle ages.
If you have an older vehicle with a lower worth, you should consider stopping the payment for comprehensive coverage. Or you may end up paying more for coverage that the actual worth of the vehicle.
6.Uninsured Motorist Insurance
Uninsured Motorist Insuranceprotects you against accidents with motorists who have no insurance coverageand against hit-and-run accidents (whether you’re walking or driving).
The uninsured motorists’ law has been passed in many states and each of these states mandates insurance companies to add it to their basic policy cover against damages that are set off by motorists who don’t have any insurance plan.
In most cases, uninsured motorist cover is often equal to the minimum
financial responsibility cap sets by a state and is mandatory in some states.
However, if you have
7.PIP Medical Expenses Insurance
You can buy Personal Injury Protection cover just for medical costs only. PIP medical expense insurance is responsible for the payment of medical costs of anyone that is injured when traveling in your vehicle, regardless of whose fault the injury is.
Based on your policy, PIP medicalexpenses may also be responsible for your medical bills when you or any of yourfamily members are traveling in another person’s car or if you’re involved in acar accident while walking.
In contrast to other healthpolicies, the medical payments aspect of a vehicle policy pays for everymedical cost incurred, with no excesses (deductibles) or co-payments known asfirst dollar coverage.
However, if you already have acomprehensive health insurance coverage, you may not need the PIP MedicalExpense Insurance, though it also covers anyone traveling in your car.
Some states allow you to choose your PIP health insurance provider. Such a provider could be an entirely different entity from your car insurance company.
8.Catastrophic Medical Expenses Insurance
Some insurance service providers offer Catastrophic Medical Expenses cover that protects you against insanely high medical expenses.
The type of health insurance you have can help you figure out whether or not you really need the catastrophic medical expense insurance.
If your health insurance has some levels of limitations you may as well go for the catastrophic medical expenses cover insurance.
9. Liability Insurance
This auto insurance policy consists of bodily injury liability such as injury you cause to someone else as well as property damage liability which is damage to someone else’s property as a result of your actions and this includes damages to other vehicles too.
Liability motor insurance ismandatory in many states, though it doesn’t necessarily involve unlimitedliability.
Many states have laws that set minimum levels for liability insurance
but such laws are often inadequate.
However, responsibility limits aredetermined by each state for injury or death to one person, death or injury tomore than one individual as well as property damage that runs into an excess ofa specified amount.
Bear in mind that if your liabilityafter insurance surpasses your amount of insurance and you have assets to yourname, such assets can be used to pay for your damages if required and itcontinues until you’re bankrupt.
Insurance premiums are high mostly for men who are below the age of 27 and for those who reside in cities where driving exposes motorists to more hazards and where car theft are common.
Several different factors affect insurance premiums including the age and value of the vehicle, the make, model and type of vehicle, your age, what the vehicle is used for, your accident history, and a whole lot of other things.
In several states, the penalties for driving without insurance is ridiculous.
In some instances, there may be no penalty at all, unless you’re involved in an accident.
As odd as it seems, when some measly financial penalties for not having auto insurance are compared with the usually high insurance coverage costs, it’s easy to see why there are so many uninsured car owners.
Nonetheless, there are several key benefits of buying auto insurance, and they include:
- Protection from financial liability
- Coverage from paying medical costs
- Preparation for law requirements
- Coverage from repair or replacement costs
- Freedom from worry
The final point (freedom from worry) says it all. With an auto insurance, you have one less thing to worry about – your car!
This includes freedom from worry about theft, vandalism or damages as a result of