7 types of car insurance

Owning a car provides an enormous amount of freedom. But car ownership also comes with risks and responsibilities. One of the biggest risks is, of course, a car accident. Because accidents happen, every driver has the responsibility to have auto insurance.

Before buying auto insurance, it is important to understand the types of insurance available and what they may cover. Let’s unlock the secret to the right auto insurance.

Liability Insurance

Liability insurance is required in most states. This type of insurance covers the losses of the OTHER driver if you are in an accident that is your fault. However, it is important to note that it does not cover YOUR losses or injuries.

Insurance policies have liability limits. These limits specify how much the policy will pay for medical care and vehicle repairs or replacement for the other driver. Insurance companies may use three different numbers to explain a policy’s liability limits. For instance, 20/40/10 coverage means that the insurance covers up to $20,000 toward medical costs for one individual, $40,000 total medical costs for the accident, and up to $10,000 for property damage.

Collision Insurance

Collision insurance is designed to cover the costs of repairing or replacing YOUR car if you cause an accident. This type of insurance also covers situations that don’t involve other drivers, including accidents with animals, guardrails, or trees. Collision insurance coverage will also kick in if another driver causes an accident but their liability insurance is not sufficient to cover your costs.

Collision insurance is not required by state laws, but it may be required by the car leasing company or lender if you are leasing a car or getting a loan to buy a car.

Comprehensive Insurance

Comprehensive insurance covers events that have nothing to do with collisions that damage your car, such as natural events like a hailstorm or a flood. This type of insurance also pays you the cash value of your car if it is stolen. Adding collision insurance coverage onto a liability or comprehensive policy may be an affordable option.

Personal Injury Protection (PIP)

Some states require Personal Injury Protection (PIP) in addition to liability insurance. PIP is designed to cover the medical expenses of you and any passengers injured in your car during an accident after you pay a deductible. A deductible is the amount of money that a policy holder must pay before the insurance company will pay. Insurance companies may offer different deductible levels to fit your needs. PIP may also be used to cover other expenses resulting from a car accident including lost wages, cleaning services, childcare, and even funerals.

Medical Payments

Insurance Medical Payments insurance is also known as MedPay in some states. This type of insurance is required in some states and optional elsewhere. MedPay covers injuries to you or your passengers in a car accident regardless of who was at fault. MedPay does not require a deductible and generally has lower premiums than PIP.

Uninsured and Underinsured Motorist Insurance

Unfortunately, there are some drivers on the road who lack car insurance or who have insufficient coverage. Most states require Uninsured and Underinsured Motorist (UM and UIM) insurance to help cover accidents involving these drivers. If you are in an accident with an uninsured or underinsured driver, this type of insurance may help cover the costs of your medical bills or car repairs. Insurance providers may bundle Uninsured and Underinsured Insurance together and offer it as a single protection.

Guaranteed Auto Protection (GAP)

If you are financing or leasing a brand-new car, you may want to consider Guaranteed Auto Protection, or GAP Insurance. This type of insurance will cover the remainder of what you owe on your loan or lease if your new car is totaled or stolen.

Find Your Coverage

Car insurance is an essential purchase, helping drivers protect themselves, their cars, and their fellow drivers. Finding the right car insurance for your situation and budget does not have to be hard. TruStage™ provides coverage that’s simple to get and simple to understand. Get a quote for auto insurance through the TruStage Auto and Home Insurance Program.