Car Insurance: What Coverage Do I Need?

If you are one of the millions of auto owners in the United States, you probably have car insurance. With so many insurance companies vying for your business, knowing which features are required and which are optional is essential when determining the types of coverage is suitable before selecting a policy. The following describes five of the most common types of car insurance features.

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1. Liability Coverage
In most states, liability coverage is not optional and required. When someone is considered ‘at fault’ in an accident, liability pays the other party for property damages or personal injuries. Unfortunately, liability does not include the cost of repairs to the vehicle or personal injuries incurred by the driver deemed responsible. The two categories of liability car insurance include:

  • Property Damage Liability – covers damages to the other party’s property.
  • Bodily Injury Liability – covers medical expenses, lost wages, and pain and suffering for the other party if you are considered ‘at fault.’ In addition, if a lawsuit is filed, your court costs and attorney fees are also covered.

Since the minimum amount of liability coverage required varies by state, it is essential that you purchase at least the requirements set by law. Higher amounts of coverage mean higher premiums and vice-versa. Before purchasing, ensure you have the right amount of coverage for your situation and budget.

2. Collision Coverage
This is an optional feature and covers repairs for the vehicle of the responsible party, after meeting a specified deductible. The deductible may vary depending on the amount of coverage you select. A lower deductible means higher premiums, a higher deductible would mean a lower premium. Collision is usually limited to the cash value of the insured vehicle.

3. Comprehensive Coverage
This type of Youi insurance coverage is optional and covers losses as a result of:

  • Collisions with animals
  • Vandalism/theft/fire
  • Weather damages – floods, hail. etc.

4. Uninsured/Underinsured Motorist Protection
Yet another car optional insurance worth considering, especially if you allow other motorists to drive your vehicle who are not listed on your policy. This feature provides liability coverage (both types) if an uninsured or underinsured driver is responsible for an accident in your vehicle.

5. Personal Injury Protection
Regardless of who is responsible for a collision, personal injury protection pays the medical expenses of the driver and all passengers in your vehicle. Often, this optional car insurance extension pays lost wages as well.

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