When it comes to protecting yourself and your vehicle, it’s important to know the different types of car insurance available and what each of them covers. This blog will break down the most popular car insurance coverage available, including the basics like liability insurance, personal injury protection, and collision coverage.
We’ll also explore how to protect yourself against uninsured or underinsured drivers, the importance of gap insurance for leased cars, and add-on options like roadside assistance coverage and classic car insurance policies.
When you reach the end, you’ll be better equipped to confidently choose the right coverage for you and your financial situation.
Basic car insurance coverage types: The foundation of protection
Before you can determine the best car insurance policies for you, you’ll want to understand the types of car insurance coverage that form the foundation of your protection. These core policies are either required by law in most states or highly recommended if you want to protect your assets in case of an accident.
What is Liability Insurance?
Liability insurance is the most common and, in most states, legally required form of car insurance coverage. It provides protection if you’re responsible for an accident that causes injury or damage to others. Without liability insurance, you could face lawsuits or be forced to cover these costs out of pocket, which can really put a strain on your finances.
Liability insurance includes two components:
- Bodily Injury Liability: This covers medical expenses, lost wages, and legal fees for the injured party.
- Property Damage Liability: This covers repairs to other vehicles or property damaged due to your part in the accident.
What is Personal Injury Protection (PIP)?
Personal injury protection, or PIP, helps cover medical expenses for you and your passengers, no matter who’s at fault in an accident. In states with no-fault insurance laws, PIP is often required to ensure you get the medical care you need immediately. PIP can also help with lost wages, rehab, and other costs related to the accident, offering more than just medical coverage. It’s a great option if you want extra protection for your medical expenses after an accident.
What is Medical Payments Coverage?
Having Medical Payments Coverage helps make sure that you’re financially protected from medical expenses, even if you’re partially at fault in an accident. Similar to PIP but typically less extensive, Medical Payments Coverage helps pay for medical costs after an accident, regardless of fault.
Unlike PIP, it focuses solely on medical bills and doesn’t cover lost wages or other related expenses. As a supplemental policy, it’s a great way to fill in the gaps your health insurance might not cover after an accident.
What is Uninsured / Underinsured Drivers Insurance?
Despite mandatory car insurance laws, many drivers don’t have enough insurance or any insurance at all. This obviously puts you at risk, but with the right Uninsured or Underinsured Motorist Coverage policies, you can protect yourself in case of an accident.
- If the other driver is uninsured: If you’re involved in an accident with a driver who doesn’t have insurance, uninsured motorist coverage can help cover your medical expenses and vehicle repairs. In many states, this coverage is optional but highly recommended, as it helps make sure you aren’t left with the bill for an accident you didn’t cause. Uninsured motorist coverage is especially important for high-traffic areas where accidents involving uninsured drivers are more common.
- If the other driver is underinsured: Even if the driver who caused the accident has car insurance, it may not be enough to cover the full cost of your injuries or vehicle damage. This is where having underinsured motorist coverage pays off. If the other driver’s liability limits are too low to pay for your damages, underinsured motorist coverage helps bridge the gap so that you can be fully compensated.
Comprehensive and collision coverage: Protecting your investment
For those who want more protection for their vehicle, collision coverage and comprehensive coverage are two common options to consider. These types of insurance make sure your vehicle is covered, whether the damage is from an accident or something else.
What is Collision Coverage?
Collision coverage helps pay for repairs to your car if you get into an accident, whether you collide with another vehicle or run into something like a fence or a tree. This coverage is important for anyone with a new or financed vehicle, as it makes sure you can get your car fixed or replaced, no matter who’s at fault. If you have a loan or lease, your lender will probably require you to carry collision coverage to protect their investment.
What is Comprehensive Coverage?
Comprehensive coverage protects your car against non-accident-related incidents such as theft, fire, vandalism, or natural disasters. It even covers damage from falling tree limbs or hitting an animal in the road, like deer, which is a relatively common issue — especially on highways that run alongside wooded areas.
Since comprehensive coverage is highly recommended to protect your vehicle from risks outside of a car accident, it’s typically required if your car is financed or leased. For older vehicles, you may decide to forgo comprehensive coverage, but for newer or higher-value cars, it’s a smart investment. And if your car is financed or leased, comprehensive coverage may be required by the lender.
Gap insurance: A must for new or leased cars
What is Gap Insurance?
If you’ve recently purchased or leased a car, gap insurance can be a lifesaver. Since cars depreciate quickly, there’s often a gap between what your insurance will pay if your car is totaled and the amount still outstanding on your auto loan. Gap insurance covers the difference between the actual cash value of your car and the amount you still owe. Without gap insurance, you could owe thousands of dollars even after your insurance pays out the car’s value.
For leased cars, gap insurance makes sure you’re not stuck paying for a vehicle you no longer have. Many lease agreements require gap insurance, but it’s a wise choice for any new car owner.
Optional add-ons for even better coverage
While the basic coverage types protect against accidents, there are several optional add-ons that offer extra protection and convenience.
What is Roadside Assistance Coverage?
With roadside assistance coverage, you’ll never have to worry about being stranded on the side of the road. This add-on provides help with towing, jump-starts, flat tires, and even lockouts. If you frequently drive long distances or have an older vehicle, roadside assistance coverage is a great investment to ensure peace of mind in the event of a breakdown.
What are Classic Car Insurance Policies?
If you have a vintage or collectible car — we’re fond of 60’s-era Mustangs, Corvettes, and the classic Volkswagen Beetle — classic car insurance policies are designed to protect your car’s unique value. Regular car insurance often doesn’t cover how much a classic car appreciates over time, but with classic car insurance, you can feel confident that your prized possession is well-protected.
What is Rental Reimbursement Insurance?
If your car is in the shop after an accident, rental reimbursement insurance helps cover the cost of a rental car for everyday use while your car or truck is getting fixed. This is super handy if you need your vehicle to get to work, take the kids to after-school activities, or do the weekly grocery shopping.
What is New-Car Replacement Insurance?
New-car replacement insurance makes sure that if your new car is totaled, your insurer will replace it with a brand-new version of the same make and model instead of just giving you its depreciated value. This coverage is perfect for anyone driving a new vehicle who wants to avoid the financial hit that comes with a car losing value so quickly. New-car replacement insurance usually adds some cost to your premium, but it’s generally not a huge increase. The price can vary based on your vehicle’s make and model, driving history, and the insurer.
What is Full Glass Coverage Insurance?
With full glass coverage, you won’t have to pay a deductible for windshield repairs or replacements. This means you can get your windshield fixed without worrying about extra costs, making it a smart choice if you often drive on highways, where cracks and chips from road debris are more common. Whether it’s a small chip or a complete replacement, full glass coverage allows you to address those issues quickly and easily. Plus, keeping your windshield in good condition helps you see clearly while driving, which keeps you safe on the road. If you drive a lot or travel frequently, this coverage can provide peace of mind and save you money in the long run.
How much car insurance do I need?
It’s important to balance what you pay for your premium and the protection you need. Choosing just the minimum coverage might save you some cash at first, but it could end up costing you more later if you get into an accident. Take some time to think about your risks and your finances to figure out if extra car insurance coverage options are a good investment for you.
When asking, “How much car insurance do I need?” the answer depends on several key factors. Here are a few to consider.
- State Requirements: Every state has its own minimum liability requirements.
- Vehicle Age: Newer cars require more protection, while older cars may only need liability coverage.
- Driving Habits: Consider higher coverage limits if you drive frequently or for long distances.
- Driving Locations: High-traffic areas or regions with severe weather may require more comprehensive coverage.
- Car Storage Locations: Cars stored in garages face fewer risks than those parked on the street.
- Personal Finances: Your net worth and ability to cover potential losses should influence how much coverage you buy.
- Number of Drivers in the Household: More drivers on your policy means higher liability exposure.
Choosing the best car insurance policies for you
As we’ve covered, many types of car insurance exist, each serving a unique purpose. Liability insurance covers you legally, and collision and gap insurance help protect your car’s value. For extra peace of mind, consider adding policies like uninsured motorist and personal injury protection for even more security.
Understanding these different options will help you be better informed and better protected. There’s no one-size-fits-all answer when it comes to car insurance. The right policy depends on your unique needs, budget, and driving habits.
Guided Solutions can help
To find the car and truck insurance policies best suited to you and the way you drive, contact the car insurance experts at Guided Solutions. We’ll listen to your needs, handle all the policy research, and do all the legwork when it comes to negotiating costs so you get options that fit your needs, budget, and situation perfectly.
Let’s get started on getting you the best insurance possible! Reach out for a free quote.