The 6 Main Types of Car Insurance

Like any routine expenditure, many people tend to faithfully pay their car insurance bills every month. However, they might not fully understand the ins and outs of their policy and if they’re paying more than they should.

This is completely understandable; after all, most of us work with our insurance agents to put together the most beneficial and cost-effective policy and premiums.

As it turns out, “car insurance” is a blanket term for a number of different types of specific coverage. While some forms of car insurance are required in virtually every state, you may be able to eliminate some coverage to save money. 

With this in mind, here are the six main types of car insurance, including what each offers and how it applies to drivers:

1. Liability Insurance

Liability insurance is required in almost every state in order for motorists to drive legally. This type of insurance will cover other drivers’ medical bills and repairs to their vehicles should you be involved in an accident that is your fault.

2. Collision Coverage

As its name implies, collision insurance will cover damage to your vehicle if you’re involved in a fender bender, run into an object, or you get in a single car accident. If you’re paying off a car loan or are leasing your vehicle, you will be legally required to carry this type of insurance on your policy. It’s also a good idea to have it in case you’re not able to pay out of pocket to have your car repaired.

3. Comprehensive Coverage

Comprehensive coverage will cover you against damage to your vehicle that’s not caused by a collision. For instance, it will provide coverage in the event of damage caused by fire, theft, vandalism, severe weather, and more. Like collision coverage, if you have a car loan or are leasing a vehicle, you will be required to carry this type of insurance.

4. Uninsured/Underinsured Motorist Insurance

Yes, drivers are required to carry liability insurance in almost every state. Unfortunately, however, there are drivers who will try to get away with not having this type of coverage. By having uninsured/underinsured motorist insurance on your policy, it will help to pay for expenses related to an accident if you’re hit by an uninsured driver.

5. Personal Injury Protection

This type of coverage extends to you and your passengers in the event of an accident. In addition to medical bills, it can include coverage for things that are usually not included in health insurance, like lost income and childcare. While not legally required in most states, personal injury protection is another type of coverage that can help provide better peace of mind, since it often covers expensive medical bills.

6. Medical Payments Insurance

Medical payments insurance will cover medical costs related to an accident not only for you but also for your passengers. It will also typically cover deductibles for other policies, including your health insurance. If you reside in Maine or New Hampshire, this type of coverage is required by law; if it’s optional in your state, you might want to discuss it with your agent.

Tips for Lowering Car Insurance Costs

As you can see, certain types of car insurance are required by law, while others you might be able to remove from your policy. Of course, there are other ways to obtain cheap car insurance that won’t break the bank. For instance, speak with your agent about raising your deductible. You can also shop around with other companies to compare rates and find the best deal for your budget.

With Car Insurance, Knowledge Equals Savings

While having car insurance is a legal necessity, it doesn’t mean you have to shell out a huge amount of money each month for your premium. By knowing more about the six main types of insurance and determining which ones you can go without, you may very well find affordable coverage that meets all the legal requirements in your state.