Reader question:
What are the different kinds of car insurance coverage?
Harry
Great question.
There a bunch of different types of coverage that come with car insurance policies, but the main ones are liability, comprehensive, and collision.
- Liability is the coverage that almost everybody has, as it’s usually required by state that all drivers have this type of insurance. Each state has different minimum amounts. Liability basically covers any harm you cause, be it to someone else’s body or property. It also pays for things like legal fees and wage loss.
- Collision is for you. It’s the coverage you get in case you get in a car accident and your car needs to be fixed or replaced altogether. This type of coverage is usually required when financing a new car. If your car is completely totaled, you may get a dollar amount or your insurer may just provide you with a new car.
- Comprehensive pays for other types of damage, like those caused by natural disaster or theft or deer. If a car isn’t worth much, it might not be reasonable to get this kind of coverage.
There are other types of coverage, too.
- PIP/Medical/No-fault: this covers medical bills if the driver or someone on the policy gets injured in a collision. It pays medical bills even if you’re the one who caused the accident.
- Uninsured/underinsured motorist: Most states require this. It helps ease the financial burden on the insurance company in case you get in an accident with a driver who isn’t insured himself.
- Supplemental: most insurance supplement your coverage for just a few bucks extra each month, and it can save you a lot in the long run. It basically just extends the amount of insurance you already have.
Cheers,
Fashun Guadarrama