the basic personal auto insurance required by most of the us. uu. provides some financial protection if you or another driver using your car causes an accident that damages someone else’s car or property, injures someone, or both.
But to make the best decisions about purchasing other types of auto insurance coverage you may need, you’ll want to understand what’s covered, what’s not covered, and what’s optional. In addition to understanding the types of coverage, you’ll also want to consider the amounts of coverage.
why? because the state-required minimums may not cover the costs of a serious accident, so it’s worth considering purchasing higher levels of coverage.
here is a summary of the types of coverage available; some are required; others are optional; all are priced individually (a la carte) to allow you to customize coverage amounts to fit your exact needs and budget.
Almost all states require car owners to carry the following auto liability coverage:
- Bodily Injury Liability – Covers costs associated with injuries and death caused by you or another driver while driving your car.
- Liability Property Damage: This coverage will reimburse others for damage you or another driver driving your car causes to another vehicle or other property, such as a fence, building, or utility pole.
frequently required coverage
many states require you to have the following coverage:
- Medical Payments or Personal Injury Protection (PIP) – Offers reimbursement of medical expenses for injuries to you or your passengers. will also cover lost wages and other related expenses.
- Uninsured Motorist Coverage: Reimburses you when an uninsured motorist causes an accident, or in the event of a hit-and-run . You can also purchase insured motorist coverage, which will cover costs when another driver does not have adequate coverage to pay the costs of a serious accident.
Even if these types of coverage are optional in your state, consider adding them to your policy for added financial protection.
While statutory basic auto insurance covers the cost of damage to other vehicles you cause while driving, it does not cover damage to your own car. To cover this, you must purchase the following optional auto insurance coverages:
- Collision: This optional coverage reimburses you for damage to your car that occurs as a result of a collision with another vehicle or another object, such as a tree or railing, when you you are at fault while collision coverage will not reimburse you for mechanical failures or normal wear and tear on your car, it will cover damage caused by potholes or rolling your car.
- comprehensive: This provides coverage against theft and damage caused by an incident other than a collision, such as fire, flood, vandalism, hail, falling rocks or trees, and other perils, even being hit by an asteroid!
- glass coverage: Windshield damage is common, and some auto policies include glass coverage with no deductible, which also includes side windows, rear windows, and glass sunroofs. or you can purchase additional glass coverage.
watch out for the gap… sure
If you lease or finance your vehicle, auto dealers or lenders may require you to purchase collision and comprehensive. But keep in mind that collision and comprehensive only cover the market value of your car, not what you paid for it, and new cars depreciate quickly. If your car is totaled or stolen, there may be a “gap” between what you owe on the vehicle and your insurance coverage. To cover this, you may want to purchase gap insurance to pay the difference. (Note: For leased vehicles, gap coverage is usually included in your lease payments.)
who is covered and when?
Your auto policy will cover you and other family members on your policy, whether you drive your insured car or someone else’s car with permission. Your policy also provides coverage if someone not on your policy is driving your car with your consent.
Your personal auto policy only covers personal driving, whether it’s to get to work, run errands, or take a trip. however, your personal auto policy will not provide coverage if you use your car for business purposes, such as delivering pizza or operating a delivery service. Keep in mind, too, that personal auto insurance generally won’t provide coverage if you use your car to provide transportation for others through a rideshare service like Uber or Lyft. however, some auto insurers now offer supplemental insurance products (at additional cost) that extend coverage for owners of vehicles that provide rideshare services.
Learn more: View this handy infographic on the types of required and optional motorist insurance coverages.