Exploring The 3 Main Types Of Auto Insurance And The Coverage They Offer


Despite most people being taught to always read before signing anything, far too many people simply skip ahead to the signature line when purchasing an auto insurance policy. In many cases, this is because individuals feel confident that they know what they are purchasing when buying auto insurance. Oftentimes it is not until these individuals need to file a claim against their policy that they discover they do not have the level of coverage they thought they had. Thankfully, you can prevent yourself from ending up in a similar situation by taking just a few minutes to learn what is covered by each of the three main types of auto insurance. This way, you ensure you are choosing a policy that includes the coverage you truly need.


The first type of auto insurance that you need to be familiar with is liability insurance. Liability insurance is required by law in all 50 states. However, each state has its own laws regarding exactly how much liability coverage your policy must provide. You will not be allowed to purchase a policy that does not at least meet the requirements of your state of residence. 

Liability insurance offers coverage that protects you from being held personally liable for any damage that results from an accident you cause. For instance, if you damage someone else's vehicle, liability insurance will pay to either repair or replace this vehicle. However, if you damage your own vehicle as well, liability insurance will not provide any coverage for this damage. 


The second type of auto insurance that you need to be familiar with is comprehensive/collision insurance. Unlike liability insurance, comprehensive/collision insurance is not mandated by law. However, if you have an active lien, such as an auto loan, you may find that your lender requires you to carry this type of insurance until the lien against your vehicle has been paid in full. This allows lenders to protect the investment that they have in your vehicle.

The purpose of comprehensive/collision insurance is to pick up where liability coverage leaves off. While liability provides protection for damage you cause to other people's property, comprehensive/collision coverage provides protection for damage that you cause to your own vehicle. 

Uninsured/Underinsured Motorist

The third type of auto insurance that you need to be familiar with is uninsured/underinsured motorist insurance. Like comprehensive/collision insurance, this type of insurance is not mandated by law but may be required by some lenders. 

Ideally, if another driver strikes your vehicle, that driver's liability insurance will cover the damage that is done to your vehicle. Unfortunately, not all drivers will have an active insurance policy as required by law. Additionally, in the case of a serious accident, you could find that a driver with only minimal coverage does not have adequate coverage to pay for all of your out-of-pocket expenses. Uninsured/underinsured motorist coverage picks up where the other driver's insurance coverage leaves off. This type of insurance will also protect you from out-of-pocket expenses in the event of a hit-and-run accident. To learn more, contact an auto insurance service. 


26 July 2021

Always Know What Auto Insurance Discounts You Qualify For

I bought my first car after I graduated from college. I was just about to become a teacher and needed a car to get me to and from work! I chose an auto insurance company my boyfriend used and stayed with them for many years. I always felt like I was paying too much for insurance, but I thought that was normal. One day a fellow teacher was talking about her auto insurance rate, and it was a fraction of what I paid! She told me that most companies offer discounts for teachers, and I soon learned that my company did not give me one. I switched to another company and now pay a lot less. I learned a lot about insurance during this time, so I decided to start a blog to share what I have learned to help anyone who needs the help!