Types of Car Insurance
A lot of drivers are lost when it comes to the issue of securing auto insurance. There are so many things to keep up with that it often becomes difficult to understand the different types of coverage, their benefits and why you should purchase a certain policy instead of another. Since car insurance is required in every state, the first step is to actually understand the different types of car insurance policies available and the benefits associated with each of them.
State Minimum Car Insurance
Every state has its own minimum state car insurance requirements and every driver who doesn’t have at least the stipulated minimum has committed an offense. The minimum requirements are represented by three figures. In Colorado, the minimum requirement is 25/50/15 which means that the driver’s car insurance policy must cover at least $25,000 for bodily injury for an individual per accident, a minimum $50,000 total bodily injury in an accident, and $15,000 in property damage, public or private.
Bodily injury coverage includes medical expenses. However, it is always advisable to purchase a policy that exceeds the required state minimum car insurance. See our State Guide for car insurance minimums, laws, regulations, and requirements.
Collision Car Insurance
Collision insurance provides financial coverage for incidents or accidents resulting from collision with another vehicle. Under collision coverage, a vehicle is protected against damages resulting from hitting a tree, a building, flipping over and any other accident. Note that only damages to your car are covered under collision insurance even if the damage resulted from the actions of another driver. However, it doesn’t cover the cost of replacement or repairs to the other vehicle, even if you are at-fault.
Liability Car Insurance
Liability car insurance, on the other hand, provides coverage by covering the cost of repairs to another vehicle. Under a liability car insurance policy, the auto insurance company agrees to cover you for the expenses that accrue from repairing the damage to another person’s vehicle and property, or the hospital bills resulting from injuries sustained by the individual—if you are held liable for the accident. Liability car insurance is usually set at a level to meet your state minimum car insurance requirements.
Comprehensive Auto Insurance
With a comprehensive auto insurance policy, the car insurance company agrees to cover the cost of any damage resulting from incidents other than collisions. Sometimes referred to as an OTC (other than collision) policy, some of the incidents covered under this policy include natural disasters, such as hurricanes, lightning, thunder, earthquakes, floods, tsunamis, fire, theft, and in some cases, collision with an animal like deer. In short, comprehensive policies provide coverage for incidents not covered by collision and liability policies or incidents that are beyond your control.
Determining The Policy To Purchase
Making a decision on which car insurance policy to purchase will be determined by different factors affecting your current financial situation and needs. For instance, many policyholders usually just settle for their state’s minimum car insurance requirements, which might only be liability coverage. This is not advisable because it doesn’t cover damage to your own vehicle, which could spell financial disaster and be a burden for low-income families.
The cost and age of a car will also affect which auto policy to obtain. For instance, if a new car is purchased with the help of a lender or bank, the policyholder will be required to purchase collision and comprehensive policies to protect the bank’s loan.
Other articles worth reading to understand and compare different types of car insurance coverage are the following:
Car Insurance Quotes Online
There are several ways of finding cheap car insurance, and chief among them is getting an auto insurance quote comparison. MyCarInsuranceRates.com allows our users to find and compare car insurance quotes online from the best auto insurance companies in the country, like Nationwide, Allstate, GEICO, Progressive, 21st Century Insurance, Liberty Mutual, State Farm, Farmers, AAA, AARP, and Esurance, helping our users find the best, cheap auto insurance available in the market.
By entering your 5-digit zip code, you can compare car insurance rates, policies, coverage, and companies, and be certain you are buying the most affordable car insurance with the best coverage.
Enter your zip code to begin a car insurance quote now and compare different types of car insurance to find the best, affordable coverage for you and your family’s needs.
