There are several types of car insurance that you can purchase to make sure you’re covered on the road. Some states require different pieces of the types covered below, so it would be wise to check with an insurance agency to see the requirements for your given state. Regardless, every state allows you to purchase these coverage options, whether they are required or optional.
This is usually the required piece of insurance, regardless of state. The amount needed may differ, but liability coverage is a must. Liability covers you in case you are deemed at fault for an accident. This is the bare minimum coverage to be able to drive, but you will likely want to get even more. You can do so by adding an umbrella policy, which could come into play in a multi-car accident that involves a lot of damage.
Liability coverage can cover a lot, but if you get into an accident you may not have enough left on your policy to cover your own car damage. Collision coverage will cover your car and will pay you to get it repaired. This is also important if you total the car. Your insurance company will pay out the approximate worth of the car if the damages exceed the value.
The previous two coverage options just covered your car in case of an accident. However, other things can happen to your car, such as theft or damage from the weather. This coverage can be very expensive since it will in fact cover just about anything. It is more of a luxury than a necessity.
Believe it or not, but almost 20 percent of drivers are driving without insurance, or not enough insurance that is required by their state. If you are involved in an accident with one of these drivers, you will be on the hook for your own damages and medical bills. Uninsured motorist coverage can help with this and make sure that you don’t lose money. It will cover your car repairs, medical bills and even lost wages if you miss time from work.
Also known as PIP, this is good if you do not have a great health insurance plan. If you do have a good one, that should cover you just fine. However, this plan can cover your medical bills, as well as the passengers in your car.
No fault insurance is required in almost half of the states. This type of insurance will cover you no matter who is at fault, and especially if you are involved in an accident and were not a cause. It can be expensive, but you may be required to have it if you live in a state like New York.
The last type of insurance you may want is “gap” insurance. Gap insurance will cover the gap between the amount you owe on the car and its actual worth. It is good to have this when you just get your car since it depreciates a lot once you drive it. If for some chance you total the car very early into it, you probably owe more than it’s worth, and gap insurance will help you here.