What are the Different Types of Auto Insurance Policies: Which One Is Right for You?: Driving a car is not just about having the perfect ride. If you are planning on hitting the road in your new set of wheels, it’s essential that you have the right auto insurance policy to go with it. Auto insurance helps protect you financially in the event of an accident or if your car is stolen. Auto insurance policies vary by company and can include several different types of coverage, each designed to meet a specific need. When shopping for auto insurance, you may be able to choose from one of these common types of policies:
Comprehensive auto insurance
Also known as all-risk coverage, comprehensive auto insurance provides protection against all types of loss, including: – Damage to the car from a car accident – Whether your fault or someone else’s, comprehensive coverage will pay for repairs/replacement of your car in the event of a car accident. – Damage from vandalism/theft – Comprehensive coverage will pay if your car is damaged or stolen while in your possession. – Damage from natural disasters – Comprehensive coverage will pay if your car is damaged as a result of flooding, hail, or other natural disasters.
Limited liability auto insurance
Also known as liability coverage, limited liability auto insurance provides protection against the cost of injuries to others and/or damage to their property in the event of an accident that is caused by you. Liability insurance may be required where you live or if you are financing your car. If not required, it may be a good idea to add this type of coverage. If a passenger in your car is injured in an accident, they may be able to sue you for medical expenses, lost wages, and other damages. Liability insurance may also protect you if you damage another person’s car or property in an accident. If you don’t have liability insurance, the other driver may have the right to take you to court to pay for their damages. Liability insurance may also be referred to as third-party insurance, personal injury protection (PIP), or basic coverage.
Collision auto insurance
Also known as comprehensive coverage with a deductible, collision auto insurance provides protection against the cost of damage to your car if you are at fault in an accident. In some states, collision coverage is required if you have comprehensive coverage. If you don’t have collision coverage and you cause damage to another car, you would need to pay for that repair out of pocket. In many cases, the other driver’s insurance company may attempt to collect the money from you. Collision coverage pays for your portion of the damage. If you don’t have collision coverage and cause damage to another car, your auto insurance may pay for the repair, but you would have to pay your insurer the full cost of the repair.
Roadside assistance
Roadside assistance is a coverage that may come with your auto insurance policy or may be offered as a separate add-on service. If your car breaks down on the road, roadside assistance will help you get back on the road quickly by providing access to a network of towing services, auto mechanics, and other roadside assistance providers. Some auto insurance companies may only offer roadside assistance as an optional add-on. Be sure to read the fine print to see if the coverage offered is the same as the roadside assistance provided by other providers. Alternatively, you can buy a stand-alone roadside assistance policy from a provider like GEICO, State Farm, or AAA. These types of policies also provide access to a network of towing services and often offer other services as well. You may want to purchase a standalone roadside assistance policy if you’re on a tight budget or prefer to go with a company that has a good reputation.
What Is the Difference Between Comp & Liability Auto Insurance?
Comprehensive auto insurance covers you if your car is damaged or stolen, regardless of who is at fault. Liability auto insurance provides protection if you damage another car. Comprehensive and liability insurance are both required in some states, while in other states you can choose to have one, both, or none. The main difference between comprehensive and liability insurance policies is the coverage they offer. Comprehensive auto insurance covers damage to your car that occurs as a result of an accident, vandalism, theft, etc., while liability auto insurance covers damage to others’ property and/or injuries caused by you in an accident.
Auto and home insurance together
Many insurance companies offer discounts when you combine auto insurance with homeowners or renters insurance. Some companies even let you bundle auto and car insurance policies together to save money on both types of policies. When you combine auto and home insurance policies, you may be able to save money on your premiums because the insurance company will take into account the reduced risk associated with having multiple policies. For example, if you have a policy that includes collision and comprehensive coverage, your insurance company may tack on a higher premium to cover potential damage to your car. If you add homeowners insurance to the mix, you may be able to reduce your auto insurance premiums by taking that added cost out of the equation.
Flood Auto Insurance
Flood auto insurance is unique from the other types of auto insurance listed above. Flood insurance policies work like an added layer of coverage on top of your normal auto insurance policy to protect against flooding damage to your car. Flood insurance is often required by lenders if you live in a high-risk flood area, but it may also be available as an optional add-on. Flood insurance is designed to pay for the full cost of repairs, even if your normal auto insurance policy has a deductible.
Theft Auto Insurance
Theft auto insurance provides coverage in the event that your car is stolen. Theft auto insurance is similar to comprehensive auto insurance, but it covers the cost of replacing your car if it has been stolen. If you have comprehensive auto insurance, it only covers the cost of repairs if your car is stolen. Theft auto insurance is often required if you have comprehensive auto insurance and live in a high-risk area. You may also be able to purchase theft auto insurance as an optional add-on to your comprehensive or liability auto insurance policy.
Conclusion
When purchasing car insurance, it’s important to understand the different types of policies available and make sure you have the right amount of coverage. While it’s unlikely that you’ll need to file a claim, it’s important to have the peace of mind that comes with having a car insurance policy in place. In the event of an accident or car theft, auto insurance will help protect you financially by covering the cost of repairs or replacing your car. When choosing the right auto insurance policy for you, it’s important to select a policy that provides the coverage you need at a price you can afford.
