What Are The Different Types Of Car Insurance-Types Of Car Insurance Coverage-FinancePlusInsurance

Top 7 – Different Types of Car Insurance

After many years spent behind the wheel of a vehicle, it’s quite easy to forget about the common dangers of the road. A large number of people may have never experienced a car accident after all, so not understanding the seriousness of the issue is understandable. Unfortunately, an estimated 32,000 fatalities occurred from car accidents over the course of 2022 across millions of accidents. Let us look into the top 7 – different types of car insurance.

What is Car Insurance?

While it may seem like a relatively well-known topic, there are certainly situations where a person may be unfamiliar with car insurance. In short, car insurance is a form of protection drivers hold which helps cover damage to your vehicle and covers you financially in the event you are held liable for an accident. Car insurance is mandatory in almost all states in the United States, but only at a basic level. There are multiple different forms of car insurance beyond the basics that a driver can also consider.

Car Insurance Claims 101: How the Process Works

One of the most mysterious tasks for drivers after a car accident is going about the process of filing an insurance claim with their company. The following steps should be followed to ensure everything goes smoothly when calling your insurance company:

  1. Give your insurance company the location of the accident and other details regarding what occurred
  2. Review your insurance coverage to see if there are any benefits you are eligible for in the meantime
  3. Work with the assigned insurance adjustor who will investigate your claim to determine fault
  4. Repair or replace your vehicle

The 7 Types of Car Insurance

When considering filing a car insurance claim, knowing which type of insurance coverage you have can help. Drivers should consider seven primary types of car insurance. All drivers should learn the details of the following types.

Auto Liability Insurance

This first form of insurance is also the basic type that is required in the majority of states within the U.S. All auto liability insurance provides is financial coverage for damage to another person’s vehicle in the event of an accident.

For example, if you are found to be 30% at-fault for the accident that occurred, you may be responsible for 30% of the damage to the other vehicle. This type of insurance will kick in and the insurance company will keep you financially covered.

Collision Insurance

In this second form of insurance, it applies more to single car accidents. In these accidents, a person crashes into something on their own or due to the actions of another driver.

For perspective, collision insurance covers a driver hitting water canisters on the road. It also covers accidentally driving off the road and hitting a barricade. Auto liability insurance, on the other hand, is different from collision insurance.

Gap Insurance

Finally, gap insurance coverage is a unique form of insurance that provides coverage to those who have a vehicle totaled after an accident.

Assuming the amount left on your auto loan was more than the depreciated value of your vehicle, gap insurance will kick in and help assist with meeting the remaining amount owed to the lender. This is an entirely optional insurance that a person can choose to add to their policy, and it isn’t altogether common.

Comprehensive Coverage Insurance

The third common form of car insurance is comprehensive coverage insurance which offers protection to your own vehicle when freak incidents such as odd weather, vandalism, theft, or other types of issues impact your vehicle.

Uninsured or Under-insured Motorist Insurance

Another common form of insurance that a driver could and should consider is uninsured or under-insured motorist insurance. When a person is in an accident with someone, this coverage activates. The person in the accident either lacks enough insurance coverage for your vehicle’s damages or has no insurance at all.

Medical Payments Coverage Insurance

If the accident injures a person in your vehicle, medical payments coverage insurance can protect financially against some of the medical expenses.

This coverage can apply to you, your passengers, or family members as well. It generally doesn’t cover medical payments for the other person involved in the accident, but this depends specifically on the different policy.

Personal Injury Protection (PIP) Insurance

Similar to medical payments coverage insurance, personal injury protection (PIP) insurance is required for drivers in no-fault states. This covers medical expenses in addition to other expenses such as lost wages, substitute services, and even funeral expenses.

At-Fault vs. No-Fault Car Insurance States

In the United States, there are two different types of policies in the states around the country: at-fault and no-fault. The U.S. at-fault states require drivers to hold auto liability insurance when they get behind the road. These states require a certain amount of insurance coverage. Insurance companies investigate accidents in these states. They determine who was at-fault and to what extent. The purpose is to figure out which company will make payments for the damages.

On the other hand, in no-fault states, drivers must carry both PIP insurance and bodily damage or property damage liability coverage. No investigation is done into who caused an accident in these states and the individuals’ insurance company pays for damages.

The Bottom Line

Any driver doesn’t want to be involved in a car accident. The accident leaves them with lasting injuries for years to come. However, the insult to injury in this situation is finding out that you are at-fault for the accident. You also find out that the other person’s vehicle is extremely damaged. You can also read about comprehensive car insurance coverage for more knowledge on the topic.

Having basic types of car insurance can keep you financially protected following your mistake. It will help ensure that you get back on the road as soon as possible. Additionally, it’s essential to reach out to a car accident lawyer if you are involved in an accident and believe legal action is necessary.