Auto Insurance Types: Explanation and Price-Value
Most states have the same types of auto insurance. This article explains the basic types. We also supply a price rating-1 being very inexpensive, 5 being quite expensive. We’ll let you know if a certain type is generally required as well. That way, you can choose car insurance that suits your needs and budget.
Personal Injury Protection (PIP)
PIP car insurance covers the insured party’s medical, hospital, and funeral expenses up to the specified amount of coverage. This includes passengers in the vehicle and pedestrians struck by the driver. Fault is disregarded. Some states (no-fault states) require PIP to a certain dollar-amount. Other states do not offer PIP at all.
The price depends upon the amount of coverage you would like and varies wildly according to driving record.
Required: In No-fault Insurance States.
Bodily Injury Liability (BIL)
When you are responsible for a collision, Bodily Injury Liability covers injuries or death to the other party. This includes medical bills, loss of income, and anguish. If you are sued, BIL covers your defense (attorneys).
BIL will not cover your own personal damages, such as your vehicle. It will do nothing if you are not at fault.
Price: 3 The expense depends upon the dollar-amount of coverage you want. Generally, a large amount of coverage is recommended—much larger than state requirements.
Required: In most states.
***In states where Personal Injury Protection (PIP) is required, BIL is generally not required. However, it is useful for when the other party’s PIP coverage is surpassed. BIL would cover a lawsuit against you in such a case.***
Comprehensive coverage will pay for the repairs to your vehicle, regardless of fault. A set deductible is subtracted from the payment.
If you choose to pay a high deductible, the premiums will be less.
Required: Sometimes when renting or leasing.
***There are two types of Comprehensive coverage: Collision and Other Than Collision. Comprehensive Collision covers all damage to the insured vehicle in a vehicle-to-vehicle incident. Comprehensive Other Than Collision covers things like theft, flood, and animal damage.***
Uninsured Motorist Coverage
This car insurance is designed to make up the difference in damages to your party past what the insurance for the liable party will cover. In other words, when the at-fault party cannot afford to pay for damages, injuries, and death to you and your passengers, Underinsured Motorist coverage will.
Price: 1 Good value for money.
Required: Not generally. Sometimes in No-fault situations.
Covers the medical costs of injury to the entire party with Medical coverage on their auto insurance policy. Liability does not matter.
Price: 3 To use this effectively, get only enough coverage to replace your vehicle on your policy, then add a large amount of Medical.
***With good Health Insurance, Medical coverage may be unnecessary***
A new car loses 1/3 value once you drive it. Gap coverage makes up the difference if it gets totaled.
Required: With some leases.