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What Are the Common Types of Car Insurance?

types of car insurance

Did you know that on average there are six million car accidents in the United States each year? With so many accidents, it’s important to ensure you have the correct level of auto insurance. 

If you’re buying auto insurance for a new vehicle or renewing your car insurance coverage for an existing vehicle, you’ll need to know the various types of auto insurance. But what are your options and what’s the difference between the different car insurance options?

Let’s explore the various common types of car insurance.

What Are the Common Types of Car Insurance?

There are six common car insurance types. These include: 

  • Auto liability cover
  • Collision coverage
  • Underinsured and uninsured motorist cover
  • Medical payments coverage
  • Personal injury protection
  • Comprehensive coverage

Let’s take a look at each of these in more depth. 

Liability Coverage

In most states, this type of car insurance is mandatory. Liability insurance will help to cover damages to property or injuries for which you’re legally responsible following an accident. As coverage varies between states, it is important to know your state requirements

There are two main components of this type of policy: bodily injury liability and property damage liability. 

Collision Coverage

If you’re in an accident and you have damage to your car caused by another vehicle, collision coverage will cover the cost of repairing your car. Collision coverage will also cover you if you hit an object such as a wall and your vehicle sustains damage as a result.

Collision coverage is usually optional, however, if you have a car on hire-purchase, it may be a requirement of the lease hire company. 

Underinsured and Uninsured Motorist Coverage

If you get hit by a motorist that doesn’t have auto insurance, uninsured motorist coverage is essential for paying your medical bills, and in many cases, the repairs to your car. Similarly, if you’re hit by an underinsured driver, this type of coverage can be helpful. 

This type of car insurance is required in many states and is optional in others. 

Medical Payments Coverage

If you or your passengers are injured in an accident, this type of coverage will help you to pay all of the costs associated with any injuries you have sustained. This could include x-rays, surgery, and much more. 

Again, this is mandatory in some states, while in others it is optional. 

Personal Injury Protection

Personal injury protection (PIP) is only available in certain states. Just like medical payments coverage, this type of insurance will cover your medical expenses following an accident. 

This is also required in some states, while it is optional in others.

Comprehensive Coverage

Comprehensive coverage might help to cover damage to your vehicle in the event of theft, fire, vandalism, or hail. If your car is covered, this type of insurance will help pay to repair or replace your vehicle. 

Comprehensive coverage is generally optional, however, your lender might require it if you have a lease hire vehicle. 

Buying Car Insurance

Now you know all of the different types of car insurance, you’ll be able to make an informed decision about the level of coverage you need.

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