The major auto insurance providers offer three main types of insurance coverage for vehicles. They are comprehensive (comp), collision, and liability. Each of these types of insurances covers different things.
Auto Insurance: Understanding the Types
Comprehensive auto insurance covers things such as replacement of the car if it is stolen. It will also cover the car if it is damaged in a natural disaster. In fact, “anything other than collision” is the nickname for comp insurance. Examples of this are a tree falling on a car or hail damage. It even includes fires or vandalism.
Similar to its name, collision policies cover repairs due to a collision. This type of policy will cover an accident no matter who is at fault. It not only covers wrecks between two cars, but also if a vehicle hits a tree, building, etc. This insurance may offer a replacement option if your car is “totaled”. Of course, that would be if the replacement is at the same value. Otherwise, they would give you money to use on a down payment on another car.
Liability insurance is the bare minimum coverage that you required by law. If you cause a car accident, this coverage will pay for the other person’s expenses. For example, this can include medical bills, lost wages, and many more things. The two types of liability insurance are bodily injury and property damage.
In all states, the law requires drivers to have liability insurance. If you own your car, you can decide which other coverage you would like to have. This does not apply if you have a loan on the car. In that case, the leinholder has a say.
Everyone’s auto insurance needs are going to be different. There are also variations and add-ons you can choose. There is no need to feel confused by the options. Your insurance agent can help see what is right for you.