5 Types of Auto Insurance Coverage Explained

14 January 2016
 Categories: , Articles

One of the most important factors for choosing an auto insurance policy is knowing what the policy will cover. Determining exactly what is covered by your auto insurance can be difficult if you are not familiar with the common terminology that insurers use. Here is an explanation of five types of auto insurance coverage to help you make an informed decision when buying new insurance.

Bodily Injury and Property Liability Coverage

Liability coverage is intended to protect you from paying for the cost of damages caused to the other driver involved in an accident that you are at fault for. There are two categories of liability coverage that insurers typically offer: bodily injury coverage and property liability coverage.

Property liability coverage covers the cost of repairing or replacing the other driver's vehicle in the event of a collision. Property liability coverage also covers structural damage to homes and other stationary objects that your vehicle may cause damage to.

Bodily injury liability coverage covers the other driver's medical or funeral costs if they are injured or killed in an accident. It also covers the same for any of the driver's passengers. Medical costs that bodily injury liability will pay for include on-site emergency care, hospital bills, and compensation for income that is lost while the other driver is recovering.

Medical Payments Coverage

Medical payments coverage, also known as personal injury protection, pays for your medical bills and those of any of your passengers that were injured in an accident. While this type of coverage is optional in most states, it is a valuable feature to add to your insurance policy because it will pay for additional medical expenses after you have exceeded the limit of your health insurance.

Uninsured and Underinsured Motorist Coverage

If you are involved in an accident with another driver who doesn't have auto insurance, the costs that would normally be covered by the other driver will now fall to you. In this scenario, uninsured or underinsured motorist coverage is the most valuable type of coverage that you can have on your auto insurance policy.

Like liability coverage, uninsured and underinsured motorist coverage are available to cover both bodily injury and property damage. While uninsured motorist coverage helps to pay your expenses if the other driver has no insurance at all, under-insured motorist coverage will pay expenses that are not covered by the other driver's liability limit. In most states, all of these features are optional, and you should research every policy carefully to determine what type(s) of uninsured or underinsured motorist coverage is included.

Collision Coverage

Collision coverage is one of the simplest types of insurance coverage to understand as it covers exactly what it sounds like it would cover: damage to your vehicle from colliding with another vehicle or structure. Collision coverage will pay for the cost of replacing parts on your car or replacing the vehicle altogether if it is totaled in an accident. However, collision coverage will only pay an amount that is equal to or lower than the cash value of the vehicle.

Comprehensive Physical Damage Coverage

While collisions are one of the most common causes of vehicle damage, your vehicle is not always safe from physical damage just because it is parked. Comprehensive physical damage coverage insures your vehicle from damages that are not related to an accident behind the wheel. Fire, weather damage, theft, and vandalism are just a few examples of the expenses that comprehensive coverage will pay for that aren't covered by collision insurance.

Knowing what your auto insurance will pay for is essential to determine if you are getting quality insurance coverage for your money. With a detailed understanding of the features that auto insurers offer, you can make an informed decision when buying new auto insurance and find the best plan to suit your needs. Click here for more information about auto insurance.