What All These Coverage Types Are About?

By Author: Marcus Stalder
Total Articles: 491
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As you may probably know any insurance policy is a bundle of different coverage types, each designed for protecting the policyholder from a specific peril. In car insurance there is a wide range of perils a car owner may confront with, that's why there are different types of coverage a person can purchase. Some people get confused about all the options they can include into their insurance policies and as a result many of them tend to overpay for things they don't actually need. Feeling like it's your kind of situation? Don't worry, there's nothing complicated about different coverage types as you have to know only the purpose and the basics behind each of them. Here's what you can include in your policy:

Bodily injury and property damage coverage

Also known as third party liability coverage, this part of car insurance policy is actually the one that makes the whole policy mandatory. So there's no way you can exclude this coverage from your policy. However, you can modify the amount of both property damage and bodily injury coverage in order to get different premiums. Still, there are special requirements regarding ...
... the lowest possible amount in each state so you'll have to stay within the limits in order to have a valid policy. Third party liability means that this coverage pays for the damage and/or injury inflicted to the other party during an accident in which you were at fault.

Collision and comprehensive coverage

These two types of coverage are often bundled into a single one because they are quite similar in purpose yet apply in different situations. Collision coverage pays for the damage to your car if it was caused by a collision with another object (vehicle, infrastructure, animal, etc) no matter who's at fault. Comprehensive coverage pays for the damage resulted from circumstances other than collision such as fire, vandalism, storm, earthquake, acts of terrorism, etc. This is an optional coverage type, however it may be imposed as mandatory by the car dealer if you're financing the purchase of the car through an auto loan.

Rental car insurance

This insurance type is particularly helpful for those who need the car everyday. If your car ends up in an accident and is sent to the repair shop you are forced to use rental car services. This coverage will pay for these services while your car is being repaired. It is an optional coverage type and should be purchased only if needed.

Uninsured/underinsured motorist coverage

There are too many drivers who go the illegal way and choose to drive without car insurance these days. And if you end up in a crash with such a driver your costs won't be covered because the other party either doesn't have sufficient coverage or any at all. If you purchase uninsured motorist coverage it will act as the other party's insurance policy and will pay for the damage and injuries caused. This is an optional coverage type but definitely a useful one.

These are the most common types of coverage you can get with your policy. Make sure to get auto insurance quotes for different sets of coverage in order to get the best rates. By comparing auto insurance quotes you will be able to determine what types of coverage you can afford and how much they will cost you.