There are quite many types of auto insurance coverage, all geared to solve the various aspects of risk associate with automobiles and finance. Knowing what type there exists will help you choose the right policy that suits your need.
Liability insurance is a basic kind of coverage that has been required by law in many places. This subdivision encompasses two major groups: bodily injury liability and property damage liability. Bodily injury liability is the coverage in case one is involved in a fault accident for the treatment and other related expenses of injuries to others. Basic coverage usually includes hospital bills, rehabilitation expenses, and sometimes even compensation for lost wages and pain and suffering. Property damage liability, on the other hand, deals with repair and replacement for property—other cars or even other other structures and buildings—of which your vehicle may have incurred damage. This insurance will sustain you financially in case you have accidents that result in claims from other parties.
If your car is damaged due to an accident—even if it is your fault with no other driver at fault—your car will be covered for the damage. This may include accidents with other vehicles or any other objects, such as trees or guardrails. Therefore, if your car has been damaged by an accident, the insurance will help to repair it, and in the case of the car being completely lost, it will pay its value less the amount of the deductible. This kind of cover is going to be very instrumental toward protecting your interest in your car and ensuring that you are not liable for the cost of repair in the event an accident happens.
This full insurance avails the vehicle owner protection against damage not caused by collision. Examples of these include but are not limited to theft, vandalism, hail, or floods arising from natural disasters, and other falling objects. Necessarily, if something mentioned in the policy happens, comprehensive coverage helps in the repair or replacement well beyond what the collision insurance would have covered. Such insurance caters to a number of risks that may cause really great damage to a vehicle besides driving accidents.
PIP can make $40,000 available to you and your passengers for medical expenses and other costs resulting from an accident, regardless of whose fault it is. These may include hospital bills, rehabilitation expenses, and, in some cases, lost wages because of injury. The thing that is great about PIP is that it pays for medical expenses regardless of fault, thus enabling help and assistance immediately after an accident.
Uninsured/underinsured motorist coverage comes into play when you are involved in an accident with somebody who has no or little insurance to pay your damages. This insurance, in most cases, will help you pay for most medical and other expenses in the event of being struck by an uninsured/underinsured driver. This form of insurance policy would definitely shield your interests from financial losses if in case the other party is not sufficiently covered.
Gap insurance is for any person that has financed or leased their vehicle. If an accident wrecks your car completely, or it's stolen, it pays the difference between what you owe on the vehicle and the current market value. Gap insurance spares the headache of paying out of pocket for the remaining loan or lease balance that started so high when the car was new. Because cars lose their worth depreciating so quickly, this happens with a car that is usually totaled.
In simpler terms, auto insurance includes liability, collision, comprehensive, personal injury protection, uninsured/underinsured motorist coverage, and gap insurance—these are all covered against certain risks or losses. Properly understanding the diverse types of auto insurance can be invaluable in designing a proper auto insurance policy custom-tailored toward satisfying your needs and according adequate financial protection from the diverse risks associated with driving.