Types of Car Insurance Coverage

Although coverage isn’t universal, a vehicle insurance policy can shield you from financial damages if you’re in an accident. There are six different forms of auto insurance available.

Property Damage Liability (PDL) Bodily Injury Liability (BI) (PD)

Medical Payments or PIP Accident Comprehensive Underinsured Uninsured Motorist
Whether you must have all six forms of auto insurance will mainly depend on where you reside, since certain coverages may be necessary while others may be elective. It might be simpler to select a policy that offers the degree of protection you want if you are aware of the differences between each form of auto insurance.

Six Types of Car Insurance Coverage, Explained

In terms of what they defend against, each of the six main types of auto insurance you may get has a specific function. Although some cover property damage or personal harm, others cover your car or another driver’s vehicle. Let’s take a deeper look at each one’s operation.

Bodily Injury Liability Insurance (BI)

If you damage someone else in an event for which you are held legally responsible, bodily injury liability insurance is intended to cover their costs. You and any other person identified as a driver on your insurance policy are both covered by this coverage.

Medical Payments or Personal Injury Protection Insurance 

Medical payments coverage can cover any associated medical costs if you or a passenger in your car are injured in an accident. Benefits are paid out up to the policy maximum and may offset any costs that must be covered by your health insurance.

If you or a hurt passenger can’t work as a result of the accident, adding personal injury protection coverage to your policy can assist with replacing lost earnings and burial costs. Depending on where you reside, you might be obliged to have a certain amount of coverage.

Drivers in Michigan, for instance, have the option to decline PIP coverage if they have Medicare Parts A and B coverage. Nevertheless, you may also get limitless PIP coverage for you and every passenger in your car at the time of an accident.

How Insurance Coverage Requirements Vary by State

You must have both personal injury liability and property damage liability insurance, with the exception of New Hampshire. (New Hampshire drivers who opt out of liability insurance must satisfy certain financial responsibility standards.)

There are also minimal financial requirements for the coverage you need to carry in the other states. While there is only one limit for property damage, bodily injury liability may have two monetary limits: one per individual and another per accident.

Your insurance policy will often use a series of numbers to represent coverage limitations. So, your insurance would be expressed as 25/50/25 if it included a $25,000 bodily injury liability limit per person, a $50,000 bodily injury liability limit per accident, and a $25,000 property damage liability limit.

The minimal coverage limitations should be seen as just that—minimums. You may choose to buy coverage over those restrictions, and doing so is frequently a wise choice. Remember that the more coverage you have, the more your auto insurance may cost.

Your state’s laws will determine if you need to have medical payments/PIP insurance, collision coverage, comprehensive coverage, or underinsured/uninsured motorist coverage. And once more, the minimum levels of coverage that you must have for each one might differ.

What Happens If You Don’t Have Car Insurance?

Driving a car without having auto insurance, or in the case of New Hampshire, completing financial responsibility criteria, is illegal no matter where you reside. Financial responsibility rules demand you to provide documentation demonstrating your ability to cover accident-related losses on your own.

Many things can happen if you are driving without insurance and are involved in an accident. First, depending on the regulations in your state and the specifics of the accident, you can receive a citation or be charged with a driving infraction. Your driving privileges might at the very least be suspended or revoked.

In addition, if you caused the accident and caused property damage or bodily harm, you may be subject to a civil lawsuit. You can be held financially liable for paying for someone’s medical expenses and/or car repairs if you don’t have insurance to cover damages. It can be financially ruinous depending on the severity of their wounds or the property damage.

The minimal coverage limitations should be seen as just that—minimums. You may choose to buy coverage over those restrictions, and doing so is frequently a wise choice. Remember that the more coverage you have, the more your auto insurance may cost.

Your state’s laws will determine if you need to have medical payments/PIP insurance, collision coverage, comprehensive coverage, or underinsured/uninsured motorist coverage. And once more, the minimum levels of coverage that you must have for each one might differ.

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