When it comes to auto insurance, it is a good idea to understand the different types of insurance that are available. Understanding what each type does will help you make decisions about what is best for you. Here are some of the types available.
Liability. Liability insurance is required in almost every state. It covers you for damages caused by your automobile in an accident. It covers other vehicles if you are at fault in an accident, and may cover medical costs of those injured. It does not cover your automobile, or any injuries you might suffer. If you have an older car that has little value, and nothing owed against it, this might be your best option for auto insurance.
Collision. This covers your vehicle, if you run your car into a building or a tree, it will cover your vehicle. Bear in mind it will pay the less between the repair costs and the fair market value of your automobile. If your car is worth $1,000 and it would take $2,000 to repair it, you would only be covered for the $1,000. Usually you must carry collision insurance if you have a loan on the vehicle.
Comprehensive. This is sort of an “every thing else” type policy that covers your vehicle from damages not caused by an accident with another car or you running into something. Theft or storm damages are two examples. Normally you have to get comprehensive and collision insurance together.
Personal injury protection. Some states have “no-fault” rules for traffic accidents. In this case, this insurance would cover your medical expenses, or those listed on the policy and your passengers. You may also get Auto Medical Payment insurance, which is similar, but acts as a supplement for health insurance and can be used to pay co-pays if you are injured.
Uninsured – under insured motorist. Just because liability insurance is required by law, does not mean everyone has it. This type insurance will cover you in that situation. There is also the case where the other person has insurance, but not enough, and this will cover that as well. This covers car repairs and medical bills.
Guaranteed Auto Protection. This is called GAP insurance and relates to collision insurance above. This covers the difference between the fair market value of your car and what you owe on it.
Umbrella policy. This covers you if you have an accident with very high damages. Sometimes wealthy people get it to cover them, as they are more likely to be sued. It would cover you if damages were above your other insurance limits.
Rental reimbursement. This insurance covers you for a rental car while your car is being repaired after an accident.
Mechanical breakdown or roadside assistance. These are two more types of insurance that will help you if you have a breakdown and need help. Towing is usually covered, and can also cover the cost of repairs to large things like engines or transmissions.
Classic Cars. If you have a classic or antique automobile, you can get a special policy for that vehicle. The details may be negotiated with the insurance agent. If you had a 30-year-old car, for instance, and it was wrecked, the fair market value would be very low, so you would want more insurance.