If you have a car, chances are you’re already considering getting a car insurance policy. It’s essential since it protects you financially in case of an accident and is also a necessity if you don’t want to get into prison, as most states require drivers to have one.
Without car insurance, you’ll be liable to pay for a lot of things out of your pocket, and let us tell you; things aren’t exactly cheap when it comes to accidents. That said, when picking a car insurance policy, there are quite a few types of coverage you should know about. By knowing the types of coverage, you’ll be able to select the right policy for you.
Here are some of them.
Liability Coverage
All states, except New Hampshire and Virginia, require their drivers to have liability coverage because it financially protects other people on the road in case of an accident. When an accident happens, your policy will cover the damages and injuries that the accident caused. Of course, the insurance will only cover the expenses up to a certain extent depending on the policy.
For the other expenses, you’ll be paying them out of your pocket. But if you don’t have car insurance, you would be paying for everything, and you’ll be at risk of going to jail, which can be another expense in and of itself.
Also, a little tip here is that you should go for higher limits for liability coverage since the required amount of the state for this coverage is usually low. This is also a good idea if you think you can’t pay for everything if an accident happens.
Collision Coverage
This one is optional in all 50 states. However, if you’re looking to get an auto loan or are looking to lease a car, your lender might require you to have this type of coverage. When you get involved in an accident, your insurance will pay for the repair of your car, no matter whose fault the accident is.
Also, if you hit a stationary object like a fence, wall, or garage, your insurance will cover it. Lastly, if the repair cost of your vehicle exceeds its current fair market value, the insurer would categorize your car as a total loss. The insurer would then give you a check equivalent to the car’s actual cash value that you can use to purchase a new car.
Comprehensive Coverage
This one is optional in all 50 states, but it’s still excellent coverage. It works by protecting drivers against damages caused by something other than a collision between two cars.
For example, it covers damages caused by weather, theft, fire, vandalism, animal damage, etc. If you’re looking for a car insurance act of god clause, it’s usually found in comprehensive coverage, but they’re not that common in other states. Acts of God coverage and comprehensive coverage are pretty much the same, except that acts of God coverage are more aimed at natural disasters.
It’s also important to note that even if this coverage isn’t necessarily required in all states, lenders commonly require it if you’re looking to get an auto loan.
Medical Payments Coverage
If you or any of your passengers get admitted to the hospital or have incurred any bills from the hospital due to an accident, this coverage will cover them.
The costs covered by this coverage are hospital visits, x-rays, medical exams, etc. Medical payment coverage is only required by some states and is optional in others.
New Car Replacement Coverage
When an insurance company declares your car a total loss, they usually write you a check to buy a new car. Usually, the money can only be used to buy a secondhand car. With the new car replacement coverage, they will cover the cost of a brand-new car. But you must be the car’s original owner to have this coverage.
Also, this is recommended if you have a new car, and it’s usually only good for about a year after you buy your original car.
Ride-Sharing Coverage
Usually, your car insurance won’t cover you if you’re working for a ridesharing company. However, ridesharing companies typically maintain insurance to protect their drivers when transporting passengers. If you’re waiting for a fare, your company might not cover you, leaving the driver unprotected when something happens to them, the car, or their passengers while on the road. Fill this gap, and the ridesharing coverage will be able to help you immensely.
Final Words
With the suitable types of coverage you have for your car insurance, you’ll be able to drive without worries since you know you’re protected financially. However, it would help if you also remembered that no insurance could protect you from all accidents or events you might experience on the road.
That said, it’s still recommended to always drive safely, not just for your health but also for your financial safety.
