A car insurance policy can do more than just protect your vehicle from damage; it can also protect your assets if you are found liable for an accident. In almost all states, drivers are required to carry a minimum amount of liability coverage, but optional forms of coverage can give you even greater protection from perils like collisions, theft, extreme weather, and damage from striking an animal.
There are many types of coverage available with car insurance. The most common forms of coverage include:
Liability coverage. Liability insurance is required by law and protects you if you are found at fault for an accident. This type of coverage covers the repair or replacement of property you damage and medical expenses incurred by others.
Collision coverage. This type of coverage pays for damage to your vehicle if you are involved in an accident or the value of your vehicle if it’s totaled. Collision coverage is a great value if you have a newer vehicle.
Comprehensive coverage. This form of coverage protects you against non-collision damage to your vehicle such as damage from hail, theft, or striking an object or animal.
Uninsured/Underinsured motorist coverage. It’s believed that 13% of drivers on the road lack minimum required liability coverage. If you are involved in an accident with an at-fault uninsured or underinsured motorist, this type of coverage protects you by paying for damage to your vehicle.
There are other types of coverage you can add to an auto insurance policy. While less common, these forms of coverage can be valuable:
Personal Injury Protection (PIP), which pays medical bills for you and your passengers, regardless of liability.
Gap coverage, which pays off the balance of your auto loan if your vehicle is totaled.
Rental reimbursement coverage, which pays for the cost of a rental car while your vehicle is being replaced or repaired for a covered event like an accident.
When choosing an auto policy, there are two primary factors to consider that also determine your premium: the level of coverage you select and your deductible. Your car insurance deductible is the out-of-pocket amount you pay toward repairs when you make a claim before the insurer covers the remaining amount. If you make a claim for $1,300 in damage and you have a $300 deductible, your insurance policy will pay $1,000 of your bill.
You can select a different deductible for comprehensive and collision coverage. In most cases, deductibles are only paid when you are found at fault.