Car Insurance ? Types of Car Insurance Policy

 What is Car Insurance ? Types of Car Insurance Policy

Vehicle insurance or car insurance is a contract between the insurance company and the vehicle owner, in which the vehicle owner will pay the premium and the insurance company will cover the loss or damage caused to the vehicle. Car insurance is mandatory in USA irrespective of whether it is a commercial vehicle or a passenger vehicle. Most insurance companies in United State have tie-ups with car manufacturers and offer instant quotes to car owners.

In other words,

CAR insurance is a contract between a car owner and a general insurance company, where the general insurance company promises to protect the car owner from financial losses that may occur from an unfortunate event involving their car. Depending on the scope of coverage, there are 3 types of car insurance –

1.      Third-Party Car Insurance,

2.      Standalone Own-Damage (OD) Car Insurance, and

3.      Comprehensive Car Insurance.

To continue to enjoy the benefits of these policies, policyholders should process their vehicle insurance renewals in a timely manner.

You can also read:

• The Best cheap car insurance for new drivers in USA 2022
• The Best Car Insurance Companies in USA 2022

Types of Car Insurance Policy

If you're buying a new car or going for car insurance, you'll likely need to understand the common types of coverage available on your policy. There are different types of car insurance available to help protect you, your passengers and your vehicle if you are involved in a car accident.

 

The six common car insurance coverage options are:

1.      motor vehicle liability coverage,

2.      uninsured and underinsured motorist coverage,

3.      comprehensive coverage,

4.      collision coverage,

5.      medical payments coverage, and

6.      personal injury coverage.

Depending on where you live, some of these coverages are mandatory and some are optional. Understanding what is required in your state and what each helps cover can help you choose the right coverage for your situation.

1. Liability coverage

Auto liability insurance is mandatory in most states. Drivers are required by law to purchase at least the minimum amount of liability coverage set by state law. Liability insurance has two components:

Personal injury liability can help pay for the costs of injuring another person if you cause an accident.

Property damage liability can help you pay for damage you cause to another person's property while driving.

 

2. Uninsured and Underinsured Motorist Coverage

If you are hit by an uninsured driver, uninsured motorist coverage can help you pay for medical expenses or, in some states, for repairs to your vehicle. If you're hit by an underinsured driver, it means they have car insurance, but their liability limits aren't enough to cover your resulting medical bills. Thus Motorist underinsurance can help with this.Uninsured and underinsured motorist coverage is required in some states and optional in others.

 

3. Comprehensive coverage

Comprehensive can help cover damage to your car caused by things like theft, fire, hail or vandalism. If your car is damaged by a covered peril, comprehensive coverage can help pay for your vehicle to be repaired or replaced (up to the actual cash value of the vehicle). This coverage has a deductible, which is the amount you pay out of pocket before the insurance company pays you for a covered claim. Comprehensive is usually optional cover – but your lender may require it if you're leasing or paying off the vehicle.

 

4. Collision coverage

If you're involved in an accident with another vehicle, or if you hit an object like a fence, collision coverage can help pay for your car to be repaired or replaced (up to its actual cash value, minus your deductible).

Collision coverage is usually optional. However, the lessee or lender of your vehicle may require it.

 

5. Medical Payment Coverage

If you, your passengers, or family members who are driving the insured vehicle are injured in an accident, health insurance can help pay for the costs associated with the injury. Covered costs may include hospital visits, surgeries, x-rays and more.

Medical payment coverage is required in some states and optional in others.

 

6. Protection against injury

Personal Injury Protection, or PIP, is only available in some states. Like medical payments coverage, PIP can help pay for your medical expenses after an accident. In addition, PIP can also help cover other expenses incurred as a result of your injuries — such as childcare expenses or lost income.

Personal injury coverage is required in some states and optional in others where available.