Bodily injury (BI) liability coverage is the most common type of auto insurance because it's required in almost every state. Liability coverage, such as bodily injury and property damage, is almost always mandatory. Depending on your state's minimum requirements, you may also need to carry personal injury protection and an uninsured driver. Personal vehicle coverage, on the other hand, is optional (unless you're financing or leasing).
A number of companies offer affordable car insurance with exceptional protection, and some outstanding coverage options include Geico, State Farm, and USAA. You could face thousands of dollars (or more) in out-of-pocket costs if you're involved in an at-fault accident and have only minimal coverage. The most common types of auto insurance coverage include liability, collision, personal injury protection, uninsured or underinsured motorists, full and medical payments. This type of car insurance is required in no-fault states or in places where each driver's injuries are covered by their own insurer, regardless of who caused the accident.
Depending on the insurance company, you may be able to add other types of car insurance to your policy in addition to the six listed above. It's often a good idea to carry more than you need to reduce your chances of having to pay high out-of-pocket expenses in the future. Exclusions from this type of car insurance include vehicle repairs and medical bills after a collision. Understanding common types of insurance coverage is essential not only to ensure that you meet your state's minimum insurance requirements, but also to protect your finances from significant out-of-pocket expense if you're involved in an accident.
Personal Injury Protection (PIP) deals with certain medical bills, funeral expenses, and child care services after a car accident. If you include new car replacement coverage in your policy, your insurance company would pay for a new car instead of one from six months ago (which would have been comparable to the vehicle that added up to the covered loss). Repair costs are often expensive after car accidents, and collision insurance allows many drivers to cover the cost of repairing their vehicles. However, most insurance professionals recommend that you set higher liability limits to better protect your finances.
In addition to mandatory liability insurance, you can consider other types of optional coverage for your vehicle, such as collision insurance and comprehensive insurance, especially if your vehicle is newer or more valuable. These types of coverage are not required by law, but if you have a loan or lease for your vehicle, your lender will likely require them. Drivers must have coverage for uninsured drivers in the states listed above, but even those who live in other states may want to purchase this type of car insurance.
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