What are the Types of Auto Insurance Coverage?

If you're looking for auto insurance, you've probably noticed that there are numerous types of coverage available. With so many options available, how do you know which ones you actually require?

To find the best auto insurance policy rates for your needs and budget, you must first understand the most common types of car insurance, as well as what is covered and what is required. And we're here to assist you in doing so. Continue reading to learn about the most common types of coverage available to protect you, your passengers, and your vehicle.

Liability Coverage

Liability insurance protects other drivers and their property from damage caused by you. This type of coverage covers the costs of repairing any vehicles as well as any medical bills incurred as a result of the accident.

Most states require all drivers to purchase at least the state-mandated minimum amount of liability insurance. However, if you can afford it, purchasing liability coverage that exceeds your state's minimum liability coverage requirement is in your best interests. Why? If you are at fault in an accident, you will be responsible for any claims that exceed the upper limit of your coverage, which means you will have to pay them out of your own pocket. As a result, buying as much liability insurance as you can afford will provide you with the best protection. This is especially important in the event of a serious accident, so you can protect yourself in the event of a lawsuit without jeopardizing your personal assets.

Types of Auto Liability Coverage

Almost every state requires car owners to have the following two types of auto liability insurance:

Bodily Injury Liability: If you cause an accident, this coverage pays for the costs associated with another person's injury or death as a result of the accident. In the event of a potentially fatal accident, this includes medical bills, lost wages, and funeral expenses.
Property Damage Liability: This type of coverage compensates others for any damage you cause to another vehicle or property, such as a tree, building, or fence.

If you live in a no-fault insurance state, you must also purchase personal injury protection (PIP). This type of insurance covers both you and your passengers for personal bodily injury damage, including medical expenses and lost income, in the event of a covered accident, regardless of who was at fault.

How Much Does Auto Liability Coverage Cost?

Your exact cost will be determined by your state and the amount of coverage you purchase. Liability insurance, on the other hand, costs an average of $588 per year. If you increase your liability limits, your monthly premium will rise. Higher levels of coverage, on the other hand, are only slightly more expensive than the state minimum, and they can save you a lot of money if you cause an accident.

Uninsured and Underinsured Motorist Coverage

What happens if you get into an accident with a driver who does not have enough insurance to cover the costs of a serious accident? Worse, what if that person has no auto insurance at all? This is where uninsured and underinsured coverage comes into play.

Uninsured and underinsured motorist coverage comes in four varieties:

Uninsured motorist bodily injury (UMBI): If you’ve been in a collision with an at-fault driver who doesn’t have insurance, this coverage ensures that you’re reimbursed for all associated damages. This includes medical bills, lost wages, and pain and suffering as a result of the accident, as well as funeral costs in the event of a fatal accident. It may also cover you if you are injured while walking or cycling.
Underinsured motorist bodily injury (UIMBI): This insurance covers the same expenses as UMBI. The only difference is that it only applies to accidents involving an at-fault driver who does not have enough insurance to cover all of the damages.
Uninsured motorist property damage (UMPD): If you are in an accident with a driver who is at fault but does not have auto insurance, UMPD will cover the damage to your vehicle or property.
Underinsured motorist property damage (UIMPD): This insurance covers the same expenses as UMPD. The only difference is that it only applies to accidents involving a driver who is only minimally insured.

In some states, both types of coverage are required, while in others, they are optional. Adding them to your policy, on the other hand, is a step toward greater financial security.

How Much Does Uninsured & Underinsured Motorist Coverage Cost?

When compared to other types of coverage in an auto insurance policy, uninsured or underinsured motorist coverage is relatively inexpensive. However, it varies by state and is typically higher in states with a higher proportion of uninsured drivers.

It does, however, differ by state. New York, New Jersey, Maine, and Massachusetts have some of the lowest percentages of uninsured motorists in the country, ranging from 3% to 5%, resulting in some of the lowest costs. However, Mississippi, Michigan, and Tennessee have the highest rates of uninsured drivers, ranging from 24 to 29 percent, resulting in higher costs.

Rates can also vary significantly between insurance companies, but you can expect to pay between $50 and $275 per year on average.

Comprehensive and Collision Coverage

Most states require all drivers to have basic auto insurance, which pays for the costs if you cause an accident that causes injury or property damage to another driver. This type of basic insurance, however, does not usually cover damage to your own vehicle.

Physical coverage — collision and comprehensive — is required if you want financial protection for your own vehicle. This optional coverage consists of two major components:

Collision coverage: If you are in an accident with another vehicle or hit an object such as a tree or guardrail, collision coverage may pay to repair or replace your vehicle. Collision coverage includes a deductible, which is the amount you must pay before your insurance company will compensate you. Depending on your policy and insurer, your deductible may differ.
Comprehensive coverage: Comprehensive insurance protects your vehicle from events other than a collision. If your car is damaged by a covered peril, such as weather, fire, flood, animals, theft, vandalism, or even being hit by an asteroid!, it may be covered to repair or replace it. This coverage, like collision protection, has a deductible, which is the amount you must pay out of pocket before your insurer will reimburse you for a covered claim.

How Much Does Collision and Comprehensive Coverage Cost?

The exact amount you will pay is determined by where you live, how much coverage you purchase, and which insurance carrier you select. A standard policy, on the other hand, will cost you between $1,112 and $1,925 per year.

Free Insurance Quotes for a Policy That Fits Your Needs and Budget

Keeping your monthly premium as low as possible begins with finding the best possible coverage rates—and we've done the legwork for you. You can choose an auto insurance plan and get coverage in minutes thanks to our quick and affordable online insurance quotes. Get a quote today and join the other drivers who are saving money every month.