Most people are already familiar with how the auto insurance basically works. Auto insurance falls under the general insurance quote since the amount required for compensation is determined depending on the damage caused by an accident. However, they are not familiar with the various types of the insurance coverage available. Knowing the various type of auto insurance is very crucial as this will certainly assist you in determining the insurance policy that perfectly suits your needs.
In this article, we will have a look at some of the most common types of auto insurance, their coverage and how they function.
Various types of auto insurance
• Liability car insurance
This is the type of auto insurance coverage that helps to cover the expenses of the other person in an accident. Liability insurance simply helps to cover for any property or injury that may result in case of an accident that you are legally responsible of. The liability coverage insurance is mandatory as a legal requirement in most states in the US so that you can be allowed to drive.
If the accident caused bodily injury, the liability coverage will help to cover for the expenses of the injured person while if the accident resulted into another person’s property damage, this coverage will certainly pay for the costs of the repairs. However, keep in mind that this insurance coverage will only pay for these expenses if you are the one at fault in the accident.
• Physical damage car insurance
This type of coverage on your auto insurance policy helps to cover for any physical damage that is done to your car. This type of insurance will pay for the damage of your car if it happens to collide with any other object or if it rolls or overturns. This coverage is suitable for anyone who wants to offer full protection to the car or anyone with any loan on the car.
• Rental insurance
This is the type of insurance offered by the car rental firms so that, in case the rental car happens to be stolen or even damaged, you will not have to pay anything in order to replace or repair the car since it covers to about $40,000. However, the coverage includes a deductible. It is also worth noting that this type of insurance can additionally cover more than just the collision damage that happens to the rental car. This may include the loss of use fees that the specific owner of that rental may incur when the car is being repaired.
• No-fault or personal injury protection (PIP) insurance
This type of auto insurance provide coverage to the pedestrians, passengers and even the driver involved in the car accident unconcerned with the person responsible for the accident. It helps to cover the various costs of hospital and medical bills to the driver, passengers and even the pedestrians affected by the accident. However, this insurance coverage is not available in all the states in the US.
• Uninsured/ underinsured motorist coverage
This type of insurance helps to cover for any damages on the driver, his passengers and the car that may occur in a car accident and the responsible person is another underinsured or uninsured driver. This insurance coverage is strongly urged for all motorists and is even mandated in most of the states in the US.
Those are the five most common types of auto insurance policies. Understanding these policies is very important as it will help you select the most suitable auto insurance coverage for your car.