Guide to the 6 Major Types of Car Insurance Policy!

Are you planning to buy a new car? Is buying a car insurance policy running in your mind? Before applying for car insurance it is very important to know about their types. There are multiple types of car insurance policy that are focused on different aspects of the vehicle.

So instead of regretting after applying for a policy, know them well. Based on our research we have found the six different types of car insurance policy. They are collision coverage, Personal injury protection, liability coverage, comprehensive coverage, uninsured/underinsured motorist coverage, and medical payments coverage. We have explained all the types in detail in this article.

6 Types of Car Insurance Policy

Type #1: Collision Coverage

If your car meets with an accident then collision coverage covers all the charges of the car’s repair.

There are certain things that you need to keep in mind. In case your car demands repair that exceeds your car’s value then they won’t pay the full amount. In such a case, the company will pay the amount that equals your car’s value.

Also read: Why Comprehensive Coverage Is Necessary For Your Car in Case of a Flood?

The company’s don’t want to face loss by allowing insurance of all the cars in the market. They look for the car’s condition and if it is really old then they are considered worth insuring. It is optional for people to apply for collision coverage but the vehicle’s lender needs to cover it.

Type #2: Personal Injury Protection

There are some car insurance policies that you can skip but personal injury protection is not one of them. It is something that you have to insure. With the number of accident cases increasing day by day we are not protected at all times. You never know what is about to come in front of you.

If you meet with an accident the cost of your personal treatment will be high. In this coverage, the medical bills of you along with your passengers are covered. It doesn’t have anything to do with who is at fault. Personal injury protection is not available in all states so do check for your state.

Type #3: Liability Coverage

The term liability itself states that you are liable for something. Here, the liability insurance covers you in case of a covered car accident. Here, the fault has to be yours that is you must be liable. The insurance policy will cover the cost of repairing the damaged vehicle or property. It also includes the medical bills of the injured people. Based on it the coverage is divided into bodily injury liability and property damage liability.

Also read: Does Car Insurance Cover Natural Disasters?

It is mandatory in most of the states of the United States of America. In fact, most of the states have enforced rules for it. According to them, the drivers must hold liability insurance of a certain minimum amount.

For extra protection, you must apply for liability insurance of a higher amount. If the charges of repair and treatment exceed the policy’s limit you may have to pay a hefty amount. Nobody wants that so please apply for liability coverage as soon as possible.

Type #4: Comprehensive Coverage

The comprehensive coverage is one that covers insurance other than a covered car accident. There are various instances in our life that are not related to the car accident. We are talking about your car’s theft, accidental fire, climatic mishappenings, and more. In such a case, it is not your fault so why would you pay for it.

Go for the comprehensive coverage and it will repair your car or replace it. Isn’t it great? If you have the budget then you must go for it. For people with lienholders, it is absolutely necessary to go for comprehensive coverage.

Type #5: Uninsured/Underinsured Motorist Coverage

Multiple states in the United States have made it mandatory for all the drivers to insure their cars. Here, we are talking about liability insurance. But what if even then you are facing the issue? Suppose, you are driving your car and you meet with an accident. The fault is yours but your liability coverage amount is not enough to cover the repair. So the company won’t pay you more and there is going to be a huge burden on you. In such a case, the uninsured/underinsured motorist coverage comes into the picture.

Underinsured coverage is a somewhat inexpensive add-on to your current insurance policy. It will prove beneficial in the above-mentioned scenario.

Uninsured is a component of a car insurance policy that helps the policyholder if he is with someone with no insurance. It is an add-on to the auto policy and pays for the injuries of the policyholder and passengers. In some instances, this may cover damage to the property. Hit-and run drivers in the US are also considered uninsured motorists.

Type #6: Medical Payments Coverage

Medical payments coverage is another add-on to the auto insurance policy. It covers the expenses related to vehicular accidents. It is also known as MedPay.

The coverage includes you and any passenger in your car. If there was a pedestrian that you have injured on the road then he or she is also covered. It covers payments like health insurance deductibles, X-rays, surgeries, visits to the doctor, and more.

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The coverage applies whether you are at fault or not. The pedestrian coverage is an interesting addition to the coverage. Even if you are the pedestrian hit by someone it covers you. So if you live in urban areas and you go for walk more often then add it.

Conclusion

We have covered the various aspects of the car insurance policy to help you and your vehicle stay safe. There are some insurance policies that are compulsory while others are optional.

We have covered the main types of the car insurance policy. These are some of the best policies that you can take advantage of. We don’t have to remind you about the present conditions on the road. The accident rates are increasing and multiple drivers just run away. You cannot pay a hefty amount for treatment in hospitals or car repair. So it’s good to apply for these car insurance policies that will help you in the long run.