Basic Types of Auto Insurance

There are different types of auto insurance plans available in the market today. In the US, auto insurance is a legal requirement; it is not a choice because if it were, no one would have seen the need to have one in the first place. The cost of auto insurance will vary depending on the type of insurance coverage and your insurer of choice. Basically, the higher the coverage the higher you will pay, and vice versa. This difference in cost and type of insurance comes as a blessing in disguise so to speak to different car owners as they will end up saving a lot depending on the type of insurance plan they opt for, and based on the type of car they seek to insure. 

The first type of auto insurance is the liability coverage. This type of insurance covers all damages and costs incurred to a third party when you are at fault. The first type of liability coverage is known as bodily injury liability, which, as the name would suggest, covers the cost incurred by a third party in terms of medical or funeral expenses in the event of an accident that you are at fault. By the same token, if a third party files a legal suit against you because of an accident that you are at fault, the liability coverage will provide you the necessary legal defense, without you having to go back to your pocket. Note the keyword here, “only when you are at fault”.

The other type of auto insurance that falls under the liability category is the property damage liability policy that covers the cost incurred when repairing or replacing damaged property in the event of an accident when you are at fault. The other type of insurance is known as collision or comprehensive coverage, which, as the name would suggest, covers almost everything under different circumstances. In the event of an accident, whether you were driving or someone else was, your insurer, under the comprehensive insurance coverage will cover all costs incurred as a result of that accident. 

Further, the comprehensive coverage will cover the cost in the event that your car is damaged by natural disasters such as floods or fire, or if it is stolen. Generally though, it is important to realize that specific insurance coverage is limited to the specific terms and conditions stipulated in the policy. Thus, you need to confirm with your insurer of choice for details of what is, and what is not covered before appending your signature as it will be a legal binding agreement, for a minimum period of at least 6 or 12 months.

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