Before you buy an insurance cover, it is important to research the options available. Some of the information you need to have is the types of coverage that are required by the law and how different forms of coverage work. One of the question you should have an answer to is, what does a car insurance covers? Here are different types of coverage you should know:
This insurance cover pays for the injuries and damages you cause to other people in case of an accident. Most countries and states require you to have this insurance to protect other people and their property. Property damage liability covers the costs of replacing or repairing cars or other property damaged in an accident while bodily injury liability covers medical expenses of the people injured in an accident.
Personal injury protection (PIP) or medical payment coverage (MedPay)
While liability covers injury expenses for other people, PIP covers medical bills for you or the passengers you may have in your car. This coverage can also cover other costs such as funeral costs, lost wages as a result of the injuries caused and the cost of replacing services that are usually performed by the injured person. However, the extent of this coverage may vary depending on your insurer and your policy agreement.
Uninsured or underinsured motorist coverage
There are many drivers who are uninsured and they might cause accidents thus causing personal injury. Even if you sue such a driver, they might not have money to cover loses and in such cases uninsured motorist (UM) coverage comes in handy. This coverage will pay your medical expenses. On the other hand, underinsured motorist (UIM) coverage is used to cover your expenses in case the other driver does not have enough liability coverage to pay your medical expenses. It is important to understand that UIM kicks in when the other driver is at fault and his liability limits. Uninsured motorist property damage (UMPD) is another type of coverage although it is not available everywhere. This coverage covers for any repairs or even replace your car when a driver who is uninsured wrecks your car.
Collision & comprehensive coverage
This coverage fixes your car or reimburse your car’s current value when damaged beyond repair. You will get a collision insurance covers when your car crashes into another car/object or flips over. However, when your car is stolen or damaged by other things except for accidents, comprehensive coverage will pay for loses. The two covers are usually sold together.
This is common to car owners who lease their vehicles. Gap insurance pays you the difference between the claims check for your car’s value and the amount of money you owe the lease. This will help you avoid incurring loses when your leased car is damaged beyond repair.
Finally, it is up to you to choose the type of coverage plan that fits your requirements and budget. Remember, there are basic covers you should have depending on the state or country you drive in.