Looking for auto insurance? Know the basics before you start shopping.

Finding the right auto insurance policy can seem overwhelming. With so many different options available, it can be hard to know where to start. 

Before you begin the search for the perfect policy, it’s important to understand the basics of auto insurance so you can find the coverage that best fits your needs. In this blog post, we’ll cover the basics of auto insurance and provide helpful tips to keep in mind while shopping around.

Liability Coverage

Liability coverage is the most basic form of auto insurance and is often required by law. It covers damage that you cause to another person or their property, as well as legal costs associated with defending a lawsuit. This coverage also includes injury or death that may result from an accident. Generally, there are two types of liability coverage – bodily injury and property damage.

Bodily Injury Liability:

Bodily injury liability coverage will pay for medical expenses and lost wages of the people injured in an accident you caused. This coverage can also include compensation for pain and suffering if allowed by the state.

Property Damage Liability:

Property damage liability coverage pays for repairs or replacement of another person’s property, such as their car, which you may have damaged in an accident. It also covers any legal costs associated with defending a lawsuit if the other party decides to sue you. 

When choosing an auto insurance policy, it is important to make sure that you have enough liability coverage to protect yourself financially. Make sure that the limits you choose are high enough to cover any costs associated with a serious accident.

Uninsured/Underinsured Motorist Coverage

Uninsured/underinsured motorist coverage is a type of auto insurance that pays for medical costs, lost wages, and property damage if you're injured in an accident caused by an at-fault driver who has no auto insurance or not enough auto insurance. 

This coverage can help protect you from financial losses in an accident caused by an uninsured or underinsured motorist.

Uninsured/underinsured motorist coverage can be divided into two parts: bodily injury coverage and property damage coverage. Bodily injury coverage pays for medical expenses and lost wages resulting from injuries caused by an at-fault driver who has no auto insurance or not enough auto insurance. Property damage coverage pays for damages to your vehicle caused by an at-fault driver who has no auto insurance or not enough auto insurance.

When considering purchasing uninsured/underinsured motorist coverage, it’s important to understand your state’s requirements regarding minimum levels of coverage. In most states, the minimum amounts of uninsured/underinsured motorist coverage are required by law. 

It’s important to read your policy carefully and know the limits of your coverage so that you can be sure that you have adequate protection in the event of an accident caused by an uninsured or underinsured motorist.

Collision Coverage

Collision coverage helps pay for repairs or replacements to your vehicle if you are involved in an accident with another car, or if your car is damaged by hitting an object, such as a fence or a telephone pole. 

It’s important to note that collision coverage only applies when you are at fault, meaning that you are legally responsible for the damage. Depending on your policy and the state in which you live, collision coverage may also cover the costs of damages caused by natural disasters, such as floods and hail storms.

If you are found to be at fault in an accident, your collision coverage will help cover the cost of repairs to your car. In some cases, the coverage may even extend to a full replacement of the car, depending on the age and value of the vehicle. 

The amount you can claim for repairs or replacement will depend on your deductible, or the amount you agree to pay before the insurance company pays for any damage. Keep in mind that higher deductibles usually mean lower monthly premiums, but more out-of-pocket expenses if an accident occurs. 

When choosing collision coverage, it’s important to carefully review your policy and decide how much coverage you want and how much you can afford. It’s also essential to make sure that you have enough coverage to repair or replace your vehicle in the event of an accident. With so many options available, make sure that you get the coverage that best fits your needs and budget.

Comprehensive Coverage

Comprehensive coverage is an optional coverage in auto insurance that helps pay for damages to your vehicle that are not caused by a collision. 

This type of coverage may help cover theft of your car, damages from severe weather such as hail, fire, and floods, as well as vandalism and other non-collision related damages. If you choose to add comprehensive coverage to your policy, it typically covers the actual cash value of your car, minus any applicable deductible. 

Comprehensive coverage may be an especially good choice for those who drive older cars with little or no market value, since it may provide more financial protection than what their car is worth. Additionally, comprehensive coverage may also be a good option for those who have newer vehicles with higher market value and want to ensure that they are properly protected.

Medical Payments or Personal Injury Protection Coverage

Medical Payments or Personal Injury Protection coverage is an important part of your auto insurance policy. This type of coverage helps pay for medical bills if you, your passengers, and/or any other insured drivers are injured in an accident. It typically covers medical expenses incurred regardless of fault, so even if you cause the accident, you can still receive this coverage.

Medical payments coverage limits will vary depending on your state’s requirements and the auto insurance company you choose. Generally, however, this coverage pays up to a certain amount for hospital visits, emergency room visits, doctor visits, prescription drugs, physical therapy, and even funeral costs related to an auto accident.

If you have health insurance, it may provide additional coverage for medical expenses beyond what is provided by the auto insurance company. Therefore, it’s important to read the fine print of your policy to see exactly what is covered.

It’s also important to note that Medical Payments or Personal Injury Protection coverage may not be required in all states. If your state does not require it, you may still opt to add it to your policy for added peace of mind. When considering whether to purchase this coverage, it’s important to weigh the potential benefits against the cost of the additional coverage.

GAP Coverage

GAP coverage (also known as Guaranteed Auto Protection) is an additional type of car insurance that covers the difference between the actual cash value of your car and what you owe on it. If your car is totaled or stolen, GAP coverage pays the difference between what your insurance company will pay and the remaining balance of your loan.

GAP coverage can be beneficial if you owe more than your vehicle is worth. This is because if your car is stolen or totaled, the insurance company typically only pays what the car is worth at the time of the incident. If you owe more than the value of your car, you could be responsible for the remaining amount. GAP coverage can help pay for this difference.

It’s important to note that GAP coverage usually only applies if your auto insurance policy already includes comprehensive and collision coverage. Additionally, most GAP policies have a coverage limit and require a deductible payment before they will cover any remaining balance on your loan.

GAP coverage can be an important part of an auto insurance policy and could potentially save you thousands of dollars in out-of-pocket expenses if you ever need to make a claim. However, it’s important to read the details of your policy carefully and understand exactly what type of protection it provides before making a purchase.