Auto Insurance Law
A broad range of options awaits drivers who are purchasing auto insurance. You should carefully review each of the available policies, which will have varying pros and cons. There are five main types of car insurance, which are discussed individually below. Also, you should make sure to understand how coverage limits and deductibles work. The coverage limit is the highest amount covered by a policy, which may need to reach a certain threshold under state law. You can choose a higher limit than the minimum threshold to provide greater security, in exchange for paying higher premiums. Meanwhile, the deductible is the term for any amount of a claim that you will be personally responsible for paying. If you are willing to commit to a higher deductible, you can pay a lower premium.
You should candidly and thoroughly describe your situation to each insurance company that you contact. This will allow them to provide accurate estimates of premiums. Some drivers may be eligible for discounts, such as drivers who belong to a certain group or who have a clean driving record. You should make sure that a company has a reasonably good reputation in handling claims before signing up for a policy. Sometimes paying more for a policy can be worth it if you will receive better customer service.
Liability Coverage
This is the basic form of auto insurance. It covers both property damage and bodily injury for other people involved in an accident in which you were at fault. If you were hurt in an accident in which someone else was at fault, their liability insurance can pay for your injuries and property damage. Each state requires a driver to purchase a certain minimum amount of liability coverage. Unfortunately, not every driver complies with this law, which can make it critical to purchase uninsured/underinsured motorist coverage (see below).
PIP/No-Fault Coverage
Personal injury protection coverage is also known as no-fault coverage because it is available regardless of who caused an accident. In theory, this means that the process should be less contentious and that an accident victim should receive compensation more efficiently. Your PIP policy applies to medical expenses for drivers and passengers, as well as other costs in some situations. If you have suffered serious injuries, you may be able to go beyond your PIP coverage to bring a personal injury lawsuit against an at-fault driver.
UM/UIM Coverage
While uninsured/underinsured motorist coverage is generally not mandatory, many drivers find that it is worth the price. If another driver is at fault for an accident in which you were injured, but they do not have insurance, you may not be able to recover compensation from their assets. This is because most drivers with significant assets will make sure to comply with state auto insurance laws, while drivers who do not have insurance usually cannot afford it. In other cases, an at-fault driver may carry the minimum amount of insurance, but it may not be enough to cover the costs of serious injuries. UM/UIM coverage addresses these situations by paying for damages that go beyond the limits of the at-fault driver’s policy, up to the limits of the UM/UIM policy.
Collision Coverage
If your vehicle was damaged in a collision, whether it involved another vehicle or a stationary object, collision coverage can cover the costs of repair or replacement. States do not require drivers to purchase this insurance.
Comprehensive Coverage
Sometimes cars suffer damage in situations other than accidents. They may encounter natural hazards, such as hail striking the car, a tree limb falling on it, or a collision with a wild animal. Or a car may be stolen or vandalized by a third party. Comprehensive coverage is the only type of coverage that applies in these situations. It is also optional, but it can be useful to drivers in areas where hazards or car thefts are widespread.
