Most Common Types of Auto Insurance

Auto insurance is one of the most important factors that motorists must consider when purchasing or operating a vehicle. It serves as an effective financial safeguard against several misfortunes such as accidents, theft, vandalism, and weather damage. There are several different types of auto insurance plans available, and the type of plan best suited for a motorist will depend on a variety of factors revolving around their expected travel environment.

1. Liability

Liability insurance is the most basic component of all auto insurance plans and is a legal requirement in almost every state in the country. It covers bodily injury and property damage caused by an at-fault driver in an accident but does not cover the damages sustained by the at-fault driver themself. Although plan specifics vary between states, most liability insurance plans will impose limits on the amount of coverage that the plan will pay for both bodily injury and property damage. For bodily injury damages, many plans will impose a limit of either $50,000 per person or $100,000 per incident, while property damage is set at a total payout of $50,000. Liability insurance can also be used to cover legal fees if the at-fault driver is being sued.

2. Uninsured and Underinsured

About 30 million drivers in the United States, roughly 15% of all drivers on the road, are uninsured. Uninsured and underinsured coverage helps to pay for damages when an at-fault driver doesn't have any or enough liability coverage. Although technically two separate types of coverages, many states will bundle both uninsured and underinsured coverages together into a single policy. Nearly half of all states require some form of uninsured or underinsured coverage for either bodily injury or vehicle damages.

3. Collision

Collision coverage helps to pay for damages sustained by a vehicle in an accident, whether or not the driver of the vehicle is considered at fault. It differs from liability insurance in that collision coverage focuses on paying for the owner's damages, whereas liability insurance focuses on paying for the opposing driver's damages when the owner is at fault. It also covers damages arising from hitting an object such as a fence, mailbox, sign, or telephone pole.

4. Comprehensive

Comprehensive coverage pays for damages to a car that don't involve collisions with other vehicles, such as hail, flooding, fire, or other weather-related incidents. Often known as "bad luck" coverage, it can also cover damages arising from vandalism, riots, theft, or a collision with an animal. Unlike many other types of coverage, comprehensive coverage is not a requirement for states or insurance providers. Most comprehensive plans require a deductible, typically ranging from $500 to $1500, before coverage kicks in.

5. Medical Payments

Although an at-fault driver's liability coverage is responsible for covering medical bills sustained by the opposing driver, the plan limits often aren't enough for accidents resulting in serious injuries. Medical payments coverage gives a motorist an added level of protection from significant medical bills that are significantly higher than the at-fault driver's liability plan will cover. It can pay for ambulance rides, hospital visits, surgery, and even professional nursing care.

6. Personal Injury Protection

Personal injury protection can also help pay for different medical expenses arising from an accident not covered by a liability plan. However, instead of focusing on directly reimbursing motorists for medical care, it instead provides direct compensation to a motorist for any lost wages due to time missed at work due to any injuries sustained. Personal injury protection can cover both drivers and passengers in a vehicle.