A car insurance policy is a type of contract that provides protection on your vehicle in case of an accident. A basic car insurance policy can include six types of coverage, some of which are required by state law and with others considered as optional. They are:
Bodily Injury Liability
This is the type of auto insurance coverage that applies to bodily injuries to another person caused in an accident that involves the policyholder.
The policy can also cover for liabilities that you as well as family members listed in the policy even when driving another person’s car provided that the driver has the car owner’s permission.
Medical Payments and PIP Coverage
The medical payments coverage pays for the medical expenses of the driver and the passengers inside the car of the policyholder in case of an accident.
The PIP or Personal Injury Protection coverage is an extension of the medical payments coverage of the car insurance.
The PIP can cover for other expenses related to the injury but not necessarily medical in nature. It extends coverage to other expenses such as lost wages, childcare as well as funeral costs.
Property Damage Liability
Property damage liability covers for the replacement or repair costs for property damaged in the accident aside from the car. This can refer to damage caused to the other car if the policyholder is at fault and may also include damage to fences, lamp posts, establishments and homes that the policy holder’s car may have hit during the accident.
Collision coverage pays for the costs of damage done to the policy holder’s car in case of collision. It can also cover car damage caused by going through potholes. Collision coverage is usually being made available with an accompanying deductible.
If the policyholder is at fault in the said collision, the insurance company will provide reimbursement for the cost of repairs for damage done on the policy holder’s car, minus the deductible.
If it is the other way around, the insurance company would usually recover the amount for the repairs from the insurance company of the other car. If successful, even the deductible on the coverage may be reimbursed t5o the policyholder.
This covers car damage caused by circumstances other than an accident with another car or object. It covers damage on the car caused by fire, natural disasters, theft, vandalism riots and other related incidents. The coverage comes with a deductible and can only go as high as the value of the car.
Uninsured and Underinsured Motorist Coverage
The uninsured motorist coverage pays for costs of injuries that are caused during a hit and run incident by an uninsured motorist. An underinsured motorist coverage will pay for the damage or injuries in a hit and run if the driver at fault is found to have insufficient insurance coverage.