There are many types of auto insurance coverage out there. And this can make it difficult to figure out what types you need. Some types of car insurance coverage are required by your state of residence, while other types of coverage are optional.
Here's more information about three main types of auto insurance coverage.
Liability insurance will provide you with coverage in the event that you are in a car accident and it is determined that you are at-fault for the accident. Liability insurance will provide coverage for the costs of other involved parties. This might include the cost of fixing damaged property as well as the cost of their medical bills. It will not cover your own losses, however.
Many states have a minimum requirement for the liability insurance coverage amount that drivers need to have.
If you are involved in an accident covered under your insurance policy, the collision coverage will pay for the car repairs. If your vehicle is totaled, the collision coverage will cover the entire value of the car at that point in time. A car is totaled if the cost of repair is greater than the vehicle's value.
If your vehicle is older, you may want to consider dropping its collision coverage. On the other hand, if you have a car that is more expensive or one that is new, collision insurance can help you return to where you were prior to the accident. This coverage is necessary if you have a lienholder.
Comprehensive coverage will cover damages that occur to your car that are unrelated to an accident. For example, weather damage and theft are covered by comprehensive coverage. Collision coverage and liability insurance cover accident damage, but not situations caused by weather or bad actors.
If it fits your budget, comprehensive coverage is a great coverage to hold. Tracking or anti-theft devices on vehicles might even make this coverage more affordable.
That said, comprehensive coverage does have a cost associated with it. If your car is easy to replace, you may not need to have comprehensive coverage. This coverage is necessary if you have a lienholder, however.
There is a limit for comprehensive coverage. The limit is the maximum amount that the policy will pay for a covered claim. Usually, the limit for comprehensive coverage is the value of the car. This might be the value of the car at the time of the accident, which is usually a depreciated value.
As you can see, there are many types of auto insurance coverage to choose from. For more information about the different types of car insurance coverage, don't hesitate to contact us.