Liability car insurance

Liability car insurance covers damages that you are legally responsible for causing to others in a car accident. It protects your finances from having to pay out of pocket for costs caused by your negligence while driving.

The two main types of liability coverage are:

• Bodily injury liability – This covers medical expenses and lost wages for people injured in an accident that you caused. It also covers legal costs if someone sues you for damages.
• Property damage liability – This pays for repairs to vehicles and other property that you damage in an accident. It covers things like repairing dents and broken windows on another vehicle.

Comprehensive coverage

Comprehensive car insurance covers damage to your vehicle from many sources beyond just a collision with another car. These sources include falling objects, fire, theft, vandalism, flooding, and other natural disasters.

Comprehensive coverage can reimburse you for damage to your car’s exterior like broken windows or dents and damage to the interior like ripped upholstery or a broken radio. It also covers the cost of repairing or replacing parts that have broken due to normal wear and tear like headlights and taillights. If your car is stolen, comprehensive insurance will reimburse you for the value of your vehicle minus your deductible.

Comprehensive coverage is optional and can be added on to a basic auto insurance policy that provides liability and collision coverage. The cost of comprehensive insurance depends on several factors like the value and make of your vehicle, where you park it overnight, your driving history, and your deductible amount. Higher deductibles will lower your premiums.

Some drivers may choose not to carry comprehensive coverage because they have an older vehicle that wouldn’t be worth repairing or replacing if damaged. However, comprehensive insurance can provide peace of mind for newer vehicles or vehicles that are fully paid off, protecting you from unforeseen expenses due to theft, vandalism, or damage from falling objects.

Collision coverage

Collision car insurance covers damage to your vehicle from an accident with another vehicle or object, like a tree or a guardrail. If you’re in an accident that is your fault, collision insurance will cover the costs to repair or replace your vehicle, minus your deductible.

Collision coverage is optional in most states but can be very valuable if you have an expensive or newer vehicle. Without collision coverage, you would have to pay all repair costs out of pocket after an accident. Collision insurance reimburses you for physical damage to your vehicle’s body, such as:

• Dents and scrapes
• Broken windows or headlights
• Damage to the vehicle’s frame
• Total loss of the vehicle if the cost to repair exceeds its value

Collision insurance does not cover damage from:

• Hail, flooding, or other disasters
• Vandalism or theft (you need comprehensive coverage for that)
• Accidents you cause intentionally

Personal injury protection coverage

Personal injury protection, also known as PIP coverage, is an optional form of auto insurance coverage that helps cover medical expenses for you and your passengers after an accident, regardless of who caused it.

PIP coverage helps pay for medical expenses like:

• Hospital bills and ambulance services
• Doctor visits and medical tests
• Prescription drugs
• Rehabilitation costs like physical therapy

Some other benefits PIP coverage may provide include:

• Lost wages if an accident prevents you from working.
• Replacement services for tasks you can no longer perform due to injuries from the accident, like childcare or housekeeping.

PIP coverage only covers you and your passengers. It does not cover injuries to people outside your vehicle, like pedestrians or occupants of other vehicles involved in the accident. Your auto liability insurance covers injuries to others.

The amount of PIP coverage you purchase determines how much will be paid out for medical expenses and other benefits. You can typically buy PIP coverage with limits between $5,000 to $50,000 or more. Higher limits mean more coverage but at a higher premium cost.

Medical payments coverage

Medical payments coverage, also known as MedPay, is an optional coverage in your car insurance policy that helps cover medical expenses if you or others are injured in an accident, regardless of fault. Here are the basics of how MedPay works:

MedPay covers medical and related expenses for you and others in your vehicle at the time of the accident. This includes things like ambulance rides, hospital bills, doctor visits, prescription drugs, physical therapy, and medical equipment.

MedPay kicks in immediately after an accident occurs. You don’t need to wait for liability claims to be settled with the at-fault driver. This means faster reimbursement of medical bills.

MedPay covers injured parties regardless of fault. Even if you cause an accident, MedPay will still cover injuries to you and passengers in your vehicle.

MedPay coverage has limits, usually between $1,000 to $100,000. The higher the coverage limit, the higher your premiums will be. Choose an amount that provides enough coverage for potential medical expenses.

MedPay is a first-party coverage, meaning the insurance pays you directly rather than to a third party. This makes the claims process simpler.

MedPay is a good option if you have a high deductible on your health insurance plan. It can help cover medical costs below your health insurance deductible.

Uninsured and underinsured motorist coverages

Uninsured and underinsured motorist coverages provide financial compensation if you’re injured or damaged in an accident caused by a driver who has little or no insurance or has insurance that does not adequately cover the cost of the damages. These types of insurance are optional in most states, so you have to specifically request and pay extra for this coverage.

Uninsured motorist coverage protects you if you’re in an accident caused by a driver who has no insurance. It covers damages for bodily injury, lost wages, medical bills, and pain and suffering resulting from the accident. The coverage limits are usually the same as your liability coverage limits.

Underinsured motorist coverage protects you if you’re in an accident caused by a driver who has insurance, but not enough to fully compensate you for your damages. For example, if the at-fault driver only has $50,000 in coverage but your medical bills and property damage total $100,000, then underinsured motorist coverage would cover the additional $50,000.

The cost of uninsured/underinsured motorist coverage depends on several factors like your location, coverage limits, insurance company, and your driving history. In general, this coverage costs between $20-$50 or more per year, but the price can vary significantly between different drivers. Higher coverage limits will also increase the cost.

Gap car insurance

Gap insurance can be a smart way to protect yourself if your car is totaled or stolen and you still owe money on your loan. Here’s how gap insurance works.

When you finance a car, you take out an auto loan for the full purchase price. But as soon as you drive the car off the lot, it starts to depreciate in value. This means there’s often a “gap” between the amount you owe on the loan and the actual cash value of the vehicle.

For example, say you buy a new car for $25,000 and finance it with a five-year loan. After just two years, your car is only worth $15,000 due to depreciation. But you likely still owe around $18,000 left on the loan. That $3,000 difference is the “gap.”

If your financed vehicle is totaled in an accident or stolen and declared a total loss, your insurance company will likely only pay you the car’s fair market value. In this case, $15,000. You’d still be on the hook for the remaining $3,000 balance on the loan. This is where gap insurance can help.

Gap insurance covers that difference between what you owe on the car loan and what the insurance company pays out. So in our example, gap insurance would pay the additional $3,000, closing the gap between the payout and your remaining loan balance. This ensures you don’t end up “upside down” on your loan, owing more than the car is worth.

Other types of car insurance coverage

There are many extra types of car insurance you can add to your policy. Most don’t cost much to add, but you may need collision and comprehensive coverage first.

• Rental reimbursement covers a rental car if yours needs repairs from an insurance claim.
• Roadside assistance helps if your car breaks down with things like jumps or tows, but a local shop may be cheaper.
• New car replacement insurance is like gap insurance and pays the full value if your new car totals.
• Full glass coverage repairs or replaces cracked windows.
• Rideshare insurance covers you for Uber or Lyft even between passengers when most companies don’t.
• Classic car insurance covers antique cars for repairs and full appreciated value.