Understanding the Different Types of Auto Insurance Coverage
Purchasing a vehicle is an exciting step. Whether you decide to get a new or used automobile, getting protection for your car is a vital component. You can make the best decision when purchasing your auto policy by understanding the various types of car insurance coverage. You may have heard different terms like liability, collision, comprehensive, and uninsured motorist coverage, but do you know what these types of auto insurance entail? Read on for answers to common questions about car insurance coverage.
Navigating the Roads of Insurance Policies
Owning a vehicle means you are mandated to have some type of car insurance coverage. Auto insurance includes different levels of coverage that financially protect you if you’re in an accident, sustain damage to your vehicle, or if you cause damage to someone else’s property. The different types of coverage you may have on your policy are as follows:
States have their own laws about how much liability you need to stay compliant when driving on the road. This is referred to as mandatory minimum insurance. Minimum amounts vary based on the state.
Mandatory Auto Insurance Coverage
No matter how much or how little you drive, one thing is a must — a liability policy. Without the minimum amount required by your state, you will be breaking the driving laws.
Liability Coverage: Protecting Others on the Road
Liability coverage comes into play if you get into an accident that results in someone getting injured or damage to someone else’s property. If you are at fault in an accident, you will be held liable – and without liability insurance, you might have to come up with enough money to pay for other people’s costs. Most people don’t have the resources to cover such expenses. So, liability will take care of medical expenses and property damage costs, up to your policy limits.
Uninsured/Underinsured Motorist Coverage: When Others Fall Short
What happens if you experience a hit-and-run accident? Or what would happen if someone caused extensive damage to your vehicle but is uninsured? Or perhaps they have a policy but not enough coverage to take care of all the costs. This is referred to as underinsured. Either way, you can add these coverages to your policy for a small amount to pick up the extra costs if either of these things occur.
The Protection Beyond the Basics: Optional Coverages
Many drivers need a policy that goes beyond the basics of liability insurance. There are various reasons why the basics won’t be enough for some drivers. Here are a few of the other types of policy additions you may want to consider.
Collision Coverage: For Damage from Accidents
If you get into an accident that involves another vehicle or property and you are at fault, you need collision protection to pay for the damage to your car. Strictly having liability won’t cover your property and medical expenses. Oftentimes, this is required by the lending institution if you don’t own your car outright.
Comprehensive Coverage: For Non-Collision-Related Damage
Adding this to your policy ensures that you have expenses paid for if some other type of damage occurs to your vehicle that is not caused by a collision. This could include things like theft, vandalism, falling objects, natural disasters (such as floods, fires, and storms), and animal collisions.
Medical Payment and Personal Injury Protection: Caring for Passengers’ Health
In the event you are involved in an accident and your passenger is injured, who will be responsible for their medical care? If the accident is not your fault, the liability insurance of the at-fault driver will kick in to help pay. If the accident is your fault, you may be forced to pay out of pocket if you do not carry some form of medical coverage.
There are two types of medical policies you can add. Depending on what state you live in, you’ll have access to either personal injury protection (PIP) or medical payment coverage (MedPay).
Gap Insurance: Bridging the Financial Divide
What happens if your new vehicle is totaled or stolen? You might think as long as you have collision and comprehensive, you’ll be in good shape. However, these only cover the current market value of your vehicle. With how quickly cars depreciate, it likely won’t pay the amount you still owe. This is where gap insurance comes in handy. It will make up the difference between the valued cost and the amount you still owe.
Roadside Assistance: Help When You Need It Most
Having roadside assistance is a convenient supplement to add to your policy. If you break down or have some other issue while on the road, you can count on a roadside assistance plan to come through and make life easier. They will do things like tow your vehicle if needed, provide a battery jump-start, change a flat tire, and even bring fuel (among other things).
Specialty Auto Coverage Beyond the Ordinary
Some situations require policies that are beyond the ordinary. The following are a few additions for special circumstances.
SR-22: After DUI Coverage
SR-22 isn’t actually insurance, it is a guarantee to the state you are carrying the required amount of insurance. It consists of a certificate that indicates you are complying with your state’s minimum insurance requirements. Certain drivers who have a DUI or other serious driving offenses must have this certificate sent to the Department of Motor Vehicles. Failure to maintain an SR-22 can result in license suspension or other penalties.
Non-Owner Car Insurance
If you drive other vehicles, such as a rented car or a family member’s vehicle, you can purchase a liability policy that protects you from financial responsibility. It provides payment for injuries and property damage to others if you cause an accident while driving a borrowed or rented car.
Insurance for Luxury and Exotic Cars
Luxury cars can benefit from a special policy reflecting their unique value and allowing for compensation for an agreed-upon value. It won’t factor in depreciation since luxury or exotic cars are known to hold their value. This policy may also include higher limits to account for potentially ordering rare or custom parts.
Finding the Right Fit: How to Choose Adequate Coverage
When determining what the best option is for your new vehicle, consider the following questions:
- Determine what type of vehicle you have (i.e., is it a classic car, luxury vehicle, brand new, or used?)
- Consider how much you drive on a regular basis.
- Think about the area you live in (i.e., how much traffic is there where you drive? Is there a high population density, etc.?)
- Do you have a loan for the vehicle? Lenders require more protection if you owe money on your car. Acceptance Offers the Type of Car Insurance You Need
Whether you’ve just purchased a new or used vehicle or are in the process of doing so, get the best coverage for your needs. Now that you’ve had car insurance coverage explained, you can obtain an affordable rate. At Acceptance, we will provide you with a free, no-obligation quote for the protection you require. It’s smart to shop around for the most competitive rate when purchasing a policy, and Acceptance is here to give you a budget-friendly rate.
Reach out to our experienced policy advisors to receive your free auto insurance quote today. Find an affordable plan that works with your vehicle and budget. Contact us by phone at (877) 405-7102, visit one of our many locations, or get a quote online.
