Car insurance is a policy that provides four different types of coverage. Let’s look at the four types of coverage you can get with car insurance:

Liability risks (liability)

Collisions and comprehensive coverage (Collision and comprehensive)

Personal injury (PIP) or “no-fault”

Uninsured or insured drivers.

Let’s see now what each form of coverage offers:

 

(1) Insurance against liability risks

Liability insurance is the basis of all automobile insurance policies. This type of insurance will pay any kind of expenses related to bodily injury or damage to property caused to third parties. However, there are conditions under which this insurance policy will not pay. They are the following:

 

• If you had the manifest intention to cause bodily injury or property damage.
• If your property is damaged in the accident (as it is likely to be covered under your home or renter’s insurance policy).
• If you have used or lent your vehicle to be used for commercial purposes.
• If someone used the car without your permission.

 

Each state sets a minimum required amount of liability coverage; and most states require approximately 50/100/25 in liability coverage. This means that your insurance company will pay up to $ 50,000 in coverage for each person you injured in the accident up to $ 100,000 in total and $ 25,000 in damages for the property. Costs can add up very quickly and so this minimum coverage amount can easily be exceeded.

 

If you want to have additional protection, think about buying an insurance against all risks, also called in English “umbrella liability policy” or umbrella liability policy. After your insurance company has paid up to the limit of your standard policy against liability (standard liability policy), your umbrella policy will cover liability risks (liability coverage) that you have.

 

(2) Collision insurance and comprehensive coverage

Collision insurance and comprehensive coverage are optional types of coverage that can be included in the policy:

 

• Collision coverage means exactly that: pay for the damage caused to your car in a crash you were at fault for. Normally, this is the most expensive part of your auto insurance account. The collision coverage will pay for the repair of your car up to the “market value” of the vehicle.
• Comprehensive or comprehensive coverage pays for the repair of your car when it is damaged by another phenomenon that is not an accident. For example: a storm, theft, vandalism, etc.

 

(3) Medical payments

Coverage for medical payments, also referred to as “MedPay,” or PIP (Personal Injury Protection) pays for immediate medical attention that you, your family members, or passengers who were in your car as a result of an accident, independently Who was the culprit? If the person responsible for the accident was someone else, your insurance company may first try to have that person’s insurance company pay the related expenses before paying through their insurance.

 

(4) Uninsured or insured drivers

When you have an accident with a person who does not have insurance or has very low coverage, this section of your insurance will cover medical expenses or property damage that does not cover the other person’s insurance. Generally the coverage in this section is the same as the one you have in your Liability section.

Nobody knows the importance of insurance until you need it. Hence the need to read and understand the coverage of your auto insurance.