7 Types Of Auto Insurance Coverage Explained

29 August 2023
 Categories: Insurance, Blog


Auto insurance is more than just a legal requirement—it's a safeguard that provides financial protection in case of accidents, theft, and other unforeseen events. With a myriad of options available, it's crucial to understand the different types of coverage to ensure you're adequately protected. Here are the common types of auto insurance coverage and what they entail.

Liability Insurance

Mandatory in most states, liability insurance covers expenses when you're at fault in an accident. It's split into two categories:

  • Bodily Injury Liability (BIL): This covers medical expenses, lost wages, or even legal fees if the other party sues for those injured in the accident due to the accident being your fault.
  • Property Damage Liability: This pays for the damage you cause to someone else's property, typically their car, but it can also cover buildings, fences, or any other property damaged in an accident.

Collision Coverage

Collision coverage is designed to pay for repairs or the replacement of your vehicle after an accident. Whether you hit another car or an inanimate object like a pole or fence, collision coverage will bear the costs, minus your deductible.

Comprehensive Coverage

For non-collision-related incidents, there's comprehensive coverage. It's designed to cover damages from events such as theft, vandalism, natural disasters, or encounters with animals like deer. Like collision coverage, you'll select a deductible and the policy covers the remaining costs.

Medical Payments (MedPay) or Personal Injury Protection (PIP)

Both MedPay and PIP cover medical expenses, regardless of who's at fault. While they seem similar, PIP offers broader protection, covering health costs, lost wages, and even funeral expenses. The availability and specifics of these coverages vary by state.

Uninsured and Underinsured Motorist Coverage

Despite being a legal requirement, not all drivers have insurance. Others might not have enough to cover all the damages in an accident. Uninsured motorist (UM) coverage protects you if you're in an accident with an at-fault driver who doesn't have liability insurance. Underinsured motorist (UIM) acts similarly but kicks in when the at-fault driver's liability limits aren't sufficient to cover all your bills.

Gap Insurance

If you're leasing or financing your car, gap insurance might be worth considering. If your car is totaled in an accident, there might be a gap between what your insurer pays and what you still owe on your loan or lease. Gap insurance covers this difference, ensuring you aren't left out of pocket.

Rental Reimbursement

If your vehicle is in the shop following an accident, rental reimbursement will cover the cost of renting a car. It's an optional addition, but for those who can't go without a car, it's invaluable.

When choosing auto insurance, it's essential to assess your needs, understand the different coverages, and ensure you're adequately protected. Remember, the cheapest policy might not always offer comprehensive protection. It's about finding a balance between cost and coverage, giving you peace of mind every time you hit the road.