Car insurance is an essential component of the car purchase process. Depending on the make and model, some cars can be costly to replace in an accident or other problem. In some cases, repairs can cost even more than what you paid for the car in the first place! For this reason, it’s essential to have reliable car insurance when you drive around so that you have peace of mind knowing that they will replace your car if anything happens to it.
Bodily Injury Liability
This type of insurance covers bodily injury you or a family member may cause another person or their property in an accident. Bodily injury coverage pays for your legal responsibility for damages, including medical costs and lost wages, if they find you legally responsible for an accident where someone is injured or killed. Additional coverage costs more, and while it can help protect assets, it may not be necessary if your assets aren’t substantial enough to make a lawsuit worthwhile.
Property Damage Liability
This is also referred to as third-party liability and covers any damages you cause to someone else property. For example, property damage liability will cover that cost if you back up your car into another and damage it. It typically involves damage to someone else’s car, but it can also include telephone poles, lamp posts, fences, or buildings hit in an accident.
Personal Injury Protection (PIP)
Also called no-fault coverage, PIP is optional in many states but required in others. It can minimize healthcare costs for you and your passengers if you get into an accident regardless of who was at fault. You’ll have your own personal PIP policy rather than having a claim handled by your insurance company under your comprehensive or collision policy.
If you’re at fault with another vehicle or an object, such as a tree or guardrail, collision coverage reimburses you for the damages. Car collision coverage does not cover mechanical failure or ordinary wear and tear on your vehicle, but it will cover pothole damage or rolling damage.
Collision coverage reimburses policyholders for the repair costs of their cars, less the deductible, even if they are at fault.
This option covers physical damage sustained by your car. It’s not intended for minor dings and scratches; instead, it covers events like vandalism or theft. Also, comprehensive coverage is often a requirement if you want to insure your car against natural disasters such as fire or floods.
Uninsured and Underinsured Motorist Coverage
Suppose you have uninsured or underinsured motorist coverage. In that case, your insurance company will cover your medical costs and lost wages if they injure you in a car accident caused by a driver who doesn’t have insurance or enough insurance. A policyholder will also be protected if they are hit while walking.
There are many types of car insurance out there that you can purchase. It’s important to know what each one is and how much it will cost you to get your vehicle properly covered. Even though some companies offer add-ons for additional coverage, don’t be tempted by these without considering whether they are necessary for your situation.