Types of Auto Coverage

It's a good idea to review your car insurance policy if you plan to buy a new car, move to a new area or think you might need additional coverage. Let's consider the main types of auto insurance, so you can prepare for a discussion with your agent.

Liability Insurance

For an accident that you cause, liability insurance reimburses you for damage you cause to another driver's vehicle or property. It also covers medical and other costs associated with injuries sustained by the other driver and their passengers. These categories are bodily injury liability and property damage liability.

Liability insurance may follow the vehicle or the driver, so check with your agent to better understand how your policy works. All the same, you'll need the policy to accurately reflect the vehicle you own, and where you live. Most states require liability auto insurance.

Collision Coverage

This insurance protects you against collisions with an object or with another vehicle. It pays for repairs or replacement of your car, to a limit. If you have a newer vehicle, it may be worthwhile to purchase this insurance to protect your financial investment. Many lenders require collision coverage as a condition of your auto loan. As the car ages, you might no longer need collision coverage due to the car's diminished value.

Comprehensive Coverage

Comprehensive coverage pays for damages to your vehicle not caused by a collision. Each policy varies, but your policy may specify storm damage, theft, vandalism and fire as covered events. Animals that run out in front of your car, such as deer and elk, often fall under comprehensive car insurance.

Your insurance agent can help you understand your policy's comprehensive coverage options.

Uninsured/Underinsured Motorist Protection

This type of car insurance protects you from drivers with no insurance or inadequate insurance. Most states require auto insurance as a condition for driving. However, some uninsured drivers still drive illegally. Others purchase the lowest coverage possible. Their insurance coverage limit may not cover the damage to your vehicle.

That's where uninsured/underinsured motorist protection kicks in. This insurance covers the gap between the at-fault driver's insurance and the cost to fix or replace your vehicle. It may also pay for lost wages, medical expenses and other costs associated with the accident. Most uninsured/underinsured coverage include coverage for hit-and-run situations.

Personal Injury Protection

Personal injury protection (PIP) pays out benefits no matter who caused the accident. It covers most or all your medical and related expenses. Typical policies include funeral costs, lost wages and rehabilitation, too.

Schedule time with your insurance agent to understand the pros and cons of each type of auto insurance. This will help you find the best combination of coverage that suits your needs.