What Are The Different Types of Car Insurance, And What Suits Your Needs?

Tuesday, May 1, 2018

Car insurance can be confusing, but it doesn’t have to be. If you are familiar with your states car insurance laws, the type of vehicle you own, and how much risk you are willing to assume, you can successfully build a car insurance policy that will meet your needs should you be involved in an accident.


With the right coverages, it will not matter if you or the other party were at fault. You will know you’ll most likey have the insurance you need for you, those in your car, and the other driver.


6 Types of Car Insurance


There are many coverages that make up an auto insurance policy. The following are the primary six that most policies include.

Liability insurance. -This is the part that is required by nearly every state to drive an automobile. It is designed to pay for the other person’s injuries and damages when you are involved in the accident where you are legally responsible. It is divided into two components.

  • Bodily injury. This portion will pay the medical expenses and lost wages. It also pays for funeral expenses should the accident result in a death of the other driver.
  • Property damage. This portion pays for damages to the other person’s property. This accident does not have to involve an automobile only; it could be a home, garage, or another fixed object that belongs to another person.

Collision coverage. -Insurers highly recommend having at least some level of this coverage. It not only covers if you collide with a car but with an object like a tree or guard rail. It would also cover a rollover. It pays for the damage to your vehicle in two ways.

  • If you were at fault in an accident, it would pay for the damages to your vehicle.
  • If the fault of the accident is split between you and the other driver, then your collision coverage would pay the portion that the others insurance did not pay.

OTC (other-than-collision) –This coverage applies when you experience such perils as theft, vandalism and some natural disasters. It will also cover if you were to hit an animal.

Medical payments coverage. -This part of auto insurance acts like bodily Injury; it will only cover the medical expenses for you and your beneficiaries.

Personal Injury Policy (PIP). -This benefit is required in some states, and in some, it is not available at all. It goes a step further than Medical Payments. It will also help with expenses not covered by health insurance, such as lost income and childcare.

Uninsured/Underinsured motorist policy. –Out of all the optional benefits, this is probably the most valuable. It works just as the title says. In the event of an accident where the other party is at fault, and they do not carry insurance, or they do not carry enough insurance, your policy would pay for medical bills and damages, or make up the difference the other party’s insurance is lacking.


Other parts of auto insurance policy can include Gap insurance, towing and labor, rental reimbursement, roadside assistance, and unique types of insurance like classic car insurance.


Designing a Policy to Suit Your Needs


Which coverage selections you make is determined by your car more than personal preference. For instance, if you are leasing a vehicle, the finance company most likely will require full coverage with specified limits for each tenant. You would have to purchase the minimum limits stipulated by the company where you bought your car.


Older model vehicles, unless they are a restored classic, do not require as much insurance as a newer model. These cars have less value and having high coverage amounts could be a waste of money. To help your pocketbook, you could lower your limits or even drop certain coverages.


Other factors to consider when purchasing the right policy for you, are discounts. There are many out there so be sure to ask your agent if you qualify for discounts such as driving behavior, vehicle equipment based, and even bundling with home or renter’s insurance.


To learn more about automobile insurance solutions for you and your family, or additional insurance options, contact our team at Protective Agency at (877) 739-9367. Our licensed insurance agents will be happy to answer any questions you have.