Understanding The Different Types Of Auto Insurance Coverage
Drivers require auto insurance coverage as specified under the law in their area. However, not all drivers will need to carry the same type of coverage. This is because insurance companies offer a variety of different auto insurance coverage options to meet the varying needs of their customers. The first step in determining what type of coverage you should purchase is to understand exactly what protection is offered by each of the different coverage options.
Coverage Option #1: Liability Coverage
Buying liability coverage is not optional since this is the type of auto insurance coverage the law requires you to have. The purpose of this coverage is to cover the cost of any property damage or injuries you may cause if you were to hit someone else. While you may not have a choice when it comes to purchasing this type of coverage, you can choose exactly how much coverage you wish to carry. Oftentimes choosing to purchase more than the legally mandated amount of coverage will prove beneficial since this ensures you are not left with large out-of-pocket expenses in the event of a major accident.
Coverage Option #2: Collision Coverage
Collision coverage is an optional type of coverage for most people. However, some lenders will require you to maintain collision coverage if your vehicle is being leased or financed. The purpose of collision coverage is to cover the cost of repairs to your vehicle if you are at fault for causing an accident. This coverage will provide you with protection up to the value of your vehicle at the time the damage occurs. Consequently, the more valuable your vehicle is, the more you will benefit from maintaining collision coverage.
Coverage Option #3: Comprehensive Coverage
Comprehensive coverage is similar to collision coverage in the way that it is only required by some lenders. However, the type of protection offered by comprehensive coverage is quite different. This is because while other auto insurance coverage focuses on damages caused by an auto accident, comprehensive coverage focuses on all the other ways in which your vehicle could potentially be damaged. For example, if severe weather causes damage to your vehicle, comprehensive coverage will pay for the cost of repairing this damage. Comprehensive coverage also protects you against financial loss if your vehicle is stolen or vandalized. Just as with collision coverage, the maximum payout with this type of coverage will be equal to the value of your vehicle. Therefore comprehensive coverage is well-suited for individuals with reasonably valuable vehicles.
Share