Shopping for car insurance can be overwhelming to the new adult. You know you need it, but there are just so many options out there that you get lost in the maze of your decision, especially when you’re on a budget.
If you’re like most drivers in the US, you’re probably looking for the best deal you can get without sacrificing coverage. But to do that, you need to understand the deals that are actually on the menu.
So, in this article, we’ll talk about all the types of car insurance, giving details on each, and recommend ones that are suited for who.
Car Insurance Types: Based on their usage
People use cars for both commercial and personal purposes, and depending on that purpose, you have to buy insurance accordingly.
Private Car Insurance
Car owners who intend to use their car solely for private use need this policy. Depending on your need, you can either get a comprehensive policy for your car or third-party coverage.
Commercial Vehicle Insurance
This is the best kind of insurance that you can get if you have a transport business. Commercial car insurance also includes third-party liability cover. No matter what kind of insurance you choose, ensure that you choose a good amount so you get complete protection against all damages.
Also, research about the insurance companies. Choose a company that offers a good deal and gives you the most competitive premium. However, there are other kinds of insurance as well.
Different Types of Car Insurance
Having car insurance is one of the most important things that you have to maintain, no matter if you have a two-wheeler or a four-wheeler. Here are some of the types of car insurance mentioned.
Liability Insurance: the Bare Minimum
Liability insurance is the foundation of any car insurance policy. It’s even compulsory in most states by law. There are two kinds of liability coverage:
- Bodily Injury Liability: If you’re the cause of an accident and someone gets hurt, this will cover their medical bills, lost wages, and even legal fees if things get out of hand.
- Property Damage Liability: This one’s for when you accidentally slam your car into someone else’s property – whether it’s their vehicle, fence, or just a building.
Who’s Liability Insurance for?
Everyone. No matter who you are, as long as you’re driving, you need this. It’s the safety net that keeps you from financial disaster if things go sideways on the road. The bare minimum.
Collision Coverage: for When Things Go Bump
As the name applies, collision coverage will cover repair or replacement costs when your vehicle gets involved with another car or object. Unlike liability insurance, this coverage doesn’t care whose fault it is.
Who’s Collision Coverage for?
If you have a car on loan or lease, your lender will likely insist you get this. Even if you own the car outright, you’d be smart to get this insurance if you can’t replace your vehicle on a whim.
Comprehensive Coverage: Protection from the Unexpected
Life’s full of surprises, and not all of them happen while you’re driving. Think of comprehensive coverage as an umbrella for your car, protecting it from theft, vandalism, fire, or natural disasters. Basically, these are things you wouldn’t expect to harm your car, especially when you’re not driving.
Who’s Comprehensive Coverage for?
If you’ve got a leased or financed vehicle, you may be required to get this policy. However, you probably should also get it if you live in an area that’s prone to severe weather or high crime rates.
Uninsured/Underinsured Motorist Coverage: Your Safety Net
Just because everyone should have insurance doesn’t mean everyone will be or have enough credit in their deal. This is not a perfect world.
Uninsured coverage will step in if someone with no insurance hits you, while underinsured coverage will help fill the gap when the driver who’s at fault doesn’t have enough credit in their insurance policy.
Who’s Underinsured/Uninsured Motorist Coverage?
You don’t know who’s driving around without insurance, and worse, you don’t know how many of them are actually reckless drivers. It’s good to have a backup plan for your backup plan. So basically everyone, but especially people in areas with reckless, nonchalant drivers.
Personal Injury Protection (PIP) and Medical Payments Coverage
These are basically for healthcare. If you are injured in an accident, PIP is going to cover your medical expenses, wage loss, and even childcare loss. And doesn’t matter whose fault it is. Medical payment coverage, often called MedPay, is similar but usually has lower limits and doesn’t cover lost wages.
Who’s Personal Injury Protection (PIP) and Medical Payments Coverage for?
Though not essential, PIP is great if you just want extra peace of mind. MedPay can be a good supplement to your health insurance, especially if you have a high deductible.
Gap Insurance
You’ve probably heard the saying that a new car loses value the moment you drive it off the lot. Gap insurance covers the difference between what you owe on your car loan and the total worth of your car.
Who’s Gap Insurance for?
If you’ve financed a new car or have a long-term lease, gap insurance can save you from major financial headaches.
Roadside Assistance and Rental Reimbursement
These are the cherries on top of your insurance sundae. Roadside assistance can be a lifesaver when you’re stranded with a flat tire or dead battery. Rental reimbursement covers the cost of a rental car while yours is in the shop after a covered accident.
Who Gets The Benefit Of Roadside Assistance and Rental Reimbursement?
It’s great if you don’t really know much about changing tires and other mechanical stuff or you don’t drive long distances often.
Rental reimbursement is perfect if you don’t have a backup vehicle and can’t afford to go anywhere without a car.
Takeaway
At the end of the day, the right policy depends on your specific situation- your car’s value, your budget, where you live, and how much risk you’re comfortable with.
Remember that it’s more than just a legal requirement. You have to protect yourself, your passengers, and your financial future. So, take your time to find the right coverage for you. And when you do, you don’t have to take auto insurance same day. Dwell on it a little more before paying the premium.
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Nabamita Sinha