Different Types of Auto Insurance Coverage Options Compared & Explained


The world of auto insurance can be very confusing. With over six different types of insurance plans available in the market, how do you find one to meet your different kinds of needs?

Here is an easy guide to help you compare and understand five basic types of insurance plans including collision, liability, comprehensive, fire and theft coverage, and personal injury protection:

Collision Coverage

Collision insurance covers any expenses incurred when your vehicle is involved in any sort of collision, be it with another car, guardrail, building, mailbox, or more. In some cases, it may also cover the damages caused by your vehicle clipping over or driving over potholes.

While collision coverage pays for the repairs your vehicle needs, if the accident causes a total loss or the damages are too severe, it could replace the car altogether. But it is important to know that in this case, you only get reimbursed for the current value of the car and not the buying price.

Liability Auto Insurance Coverage

Unlike collision coverage, liability insurance does not cover any damage expenses related to your property, or any injuries sustained. Instead, it covers you when you’re driving your car, or someone else’s, with their permission of course. There are two types of liability coverages:

Bodily Injury Liability: Bodily injust liability coverage comes into play when an accident caused by you results in injury to another party.

Property Damage Liability: Property damage liability kicks in when an accident caused by you or your vehicle damages someone else’s property, be it their house or car.

Comprehensive Coverage

While collision coverage covers damages caused due to vehicular accidents, comprehension coverage covers almost any type of damage to your car that is NOT the result of an auto accident. It could be damage caused by severe weather like hurricanes, tornadoes, hail storms, or even damage caused by an object falling on your car!

Fire and Theft Coverage

Fire and theft coverage goes beyond comprehensive coverage and the damages caused by natural disasters. Instead, this type of auto insurance coverage will come into play in case your vehicle gets damaged or totaled due to fire or if your car gets stolen.

Personal Injury Protection

Similar to bodily injury coverage, Personal injury protection, or PIP, covers approximately 80 percent of medical expenses including, funeral costs, rehabilitation, and lost wages.

But unlike bodily injury liability, PIP also covers you, your passengers, or anyone else driving your vehicle with your permission.

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