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Six Types of Car Insurance Coverage

Are you thinking about buying car insurance? If so, we can help!

Before investing in a new car insurance policy, there are six types of car insurance policies that you should consider including the following:

Bodily Injury Liability Insurance (BI)

Bodily injury liability insurance is designed to pay medical expenses for someone else if you injure them in an accident where you’re deemed to be at fault. This coverage can apply to you and to anyone else listed as a driver on your policy.1 2

Property Damage Liability Insurance (PD)

Property damage liability insurance also covers you in accidents in which you’re at fault. It pays for repairs to the other driver’s vehicle or other property you may damage.3

Medical Payments or Personal Injury Protection Insurance (PIP)

If you or a passenger in your vehicle are hurt in an accident, medical payments or personal injury protection coverage can help pay any resulting medical bills. This type of coverage can also cover lost wages if you or an injured passenger are unable to work or funeral expenses if someone in your vehicle dies because of an accident.3

Collision Coverage

While property damage liability insurance pays for damage to someone else’s vehicle or property following an accident, collision coverage pays for damage to your own vehicle or property. That can include damages caused by a collision with another vehicle or hitting a stationary object, such as a tree or fence.3

Comprehensive Coverage

Comprehensive coverage reimburses you for loss, theft, or damage to your vehicle caused by something other than a collision. For example, that can include fire damage, damage from hail and other falling objects, or damage caused by animals.3

Underinsured/Uninsured Motorist Coverage

Underinsured motorist coverage can protect you if you’re involved in an accident where the driver who’s at fault doesn’t have sufficient insurance. Uninsured motorist coverage is meant to protect you if you’re in an accident with a driver who has no insurance at all.3

If you’re financing a vehicle, your lender may require that you take out collision and/or comprehensive coverage and keep it until the loan is paid off.

How Insurance Coverage Requirements Vary by State

Every state but New Hampshire requires you to have both bodily injury liability and property damage liability coverage. (New Hampshire drivers do have to meet certain financial responsibility requirements to forgo liability coverage.)4

In the remaining states, there are also minimum dollar amounts for the coverage you must carry. Bodily injury liability can have two dollar limits: one per person and another per accident, while there’s only one limit for property damage.5

Coverage limits are typically expressed in your insurance policy by a sequence of numbers. So, for example, if your policy has 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, your policy would express it as 25/50/25.

It’s important to note that the minimum coverage limits are just that—minimums. You can opt to purchase coverage above those limits, and that’s often a smart idea.

Whether you’re legally required to carry medical payments/PIP insurance, collision coverage, comprehensive coverage, or underinsured/uninsured motorist coverage depends on your state. And again, the minimum coverage amounts you’re required to have for each one can vary.

Other Kinds of Optional Car Insurance Coverage

Depending on the insurance company, you may be able to add other types of car insurance to your policy besides the six listed above.

For example, that might include:

  • Roadside assistance insurance
  • New car replacement coverage
  • Gap insurance
  • Towing and labor insurance
  • Rental car reimbursement insurance

There are also scenarios that may require specialty insurance coverage. For example, if you have a classic or antique car you may need an insurance policy that takes the car’s age, value, and how often you drive it into account. You could also purchase specialty coverage for a vehicle that you leave in storage or if you use your car to offer ride-sharing services.

What Happens if You Don’t Have Car Insurance?

Regardless of where you live, it’s against the law to drive a vehicle without car insurance (or meeting financial responsibility requirements, in the case of New Hampshire. Financial responsibility laws require you to furnish proof that you can pay damages yourself if you’re involved in an accident.)6

If you drive without insurance and an accident occurs, several things can happen. First, you could be ticketed and/or charged with a driving violation, according to the laws in your state and based on the circumstances of the accident. At a minimum, you may have your driver’s license suspended or revoked.6

Additionally, you could face a civil lawsuit if you’re at fault in the accident and cause physical injury or property damage. Without an insurance policy to pay damages, you could be held financially responsible for covering someone’s medical bills and/or for repairs to their vehicle. Depending on the extent of their injuries or the property damage, that could be financially devastating.6

Shopping for Car Insurance

If you need car insurance, it pays to research different companies and policies first. Then get quotes from several insurers. Pay particular attention to the policies’ premiums and deductibles so you can make a fair cost comparison.

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Contact The Howard Steele Agency

For more information on the car insurance policy that you should get, or to speak with us about the other insurance products that we can offer you, contact us today by calling (541) 318-8835 or click here to start a quote online.