Different types of auto insurance are used for different purposes. The five types of vehicle insurance are as follows:
Liability
This insurance doesn’t cover expenses related to any injuries you may suffer, or any damage to your property. Liability covers the expenses of other parties that suffer in an accident where you are at fault. In order to legally drive a vehicle, every state has a minimum amount of liability coverage. You can even avoid buying this coverage in some states if you prove that you have personal finances that can cover these minimum requirements of the state. The 2 types of insurance that fall under this category include property damage liability and bodily injury liability.
Collision
This is applicable when your car is involved in any type of collision, whether it’s a guardrail, building, any stationary object, or even another vehicle. In some cases, it may also cover any damage caused by running over or flipping over potholes.
However, keep in mind that in this case, you will be reimbursed only for the current car value, not its purchase price.
Comprehensive
This coverage applies to almost every type of loss that may take place, but not as a result of an accident- this pays for any damage that is caused to your vehicle by anything other than another car. It could be anything such as damage from natural disasters (floods, fire, earthquakes), or severe weather (hail storms, hurricanes, tornadoes). It also applies if your vehicle is stolen or vandalized, or if you hit an animal.
Fire and Theft Coverage
This type of coverage applies if your car is stolen, when your vehicle is damaged or totaled as a result of a fire. If your vehicle catches fire due to an explosion or lightning, this coverage will pay to replace or repair your car. It also offers redundancies in coverage for things like hail or wind damage, floods, accidents caused by hitting an animal, earthquakes, or vandalism.
Personal Injury Protection
This protection complements bodily injury liability coverage- it covers about 80% of medical expenses including lost wages, funeral costs, and rehabilitation. It is also known as ‘no-fault coverage’ or medical payment insurance in some states.
This coverage is mandatory in 16 states; if this is optional in your state, it’s recommended that you add it to your insurance for added protection.
