There are different types of auto insurance coverage available for your protection. Here are the most common types that an auto insurance company may provide.
Liability Cover. Liability coverage pays others for damages resulting from a car accident that you cause. It also pays for a lawyer to defend you if you are sued for damages.
Comprehensive Coverage – Comprehensive coverage is intended to cover damage to (or the loss of) the insured vehicle resulting from causes other than collision such as storm damage, theft, vandalism and fire.
Collision Coverage – Collision coverage, as it’s name suggests, covers damages to your car due to collision with other vehicles, stationery objects and any road obstructions.
Uninsured/Underinsured Cover. Uninsured and underinsured driver coverage protects you when the negligent driver has no auto insurance or insufficient insurance. In most sates this only covers bodily injury, and not property damage.
GAP Coverage – We all know that there is a sharp decline in the value of a car immediately after purchase. This means that any loan you took out to finance the purchase of the vehicle could be many thousands of dollars greater than the amount your auto insurance company would pay out if your car was stolen or became a total loss following an accident. Gap cover or loan/lease cover as it is also known is intended to bridge that gap in valuation and the amount you owe on the loan.
PIP Personal Injury Protection – PIP (also known as no-fault), covers medical and funeral expenses and lost wages of the driver and passengers in the insured vehicle no matter who caused the accident.
Pay-Per-Mile – Pay-Per-Mile insurance is a novel approach to possibly saving money on car insurance. With this type of insurance the price of your premium would be directly linked to the number of miles you drive. The fewer the miles, the lower the costs would be. This sounds promising, but it does suffer from two major drawbacks. Firstly it is available in very few states (around 12 at the time of writing) and secondly it involves the insurance company fitting a tracking device to your car.
In the end, getting the best premium and coverage that fits your budget is a balancing act.
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