Auto insurance is something most drivers are required to carry, yet many people aren't sure exactly what their policy covers. Policies are made up of several types of coverage, each designed to protect you in different situations. Understanding these pieces helps you choose the right protection — and avoid paying for coverage you don't need or discovering gaps when it matters most.
Liability coverage is the foundation of nearly every auto policy and is required by law in most states. It pays for injuries and property damage you cause to others in an accident. It typically includes bodily injury liability and property damage liability. Because accidents can be costly, many drivers choose limits higher than the legal minimum for added protection.
Protecting your own vehicle
Collision coverage pays to repair or replace your car if it's damaged in a crash with another vehicle or object, regardless of who's at fault. Comprehensive coverage protects against non-collision events, such as theft, vandalism, fire, falling objects, severe weather or hitting an animal. If you have a loan or lease, your lender will usually require both.
Both collision and comprehensive coverage come with a deductible — the amount you pay out of pocket before insurance covers the rest. Choosing a higher deductible lowers your premium, but make sure it's an amount you could comfortably pay if you needed to file a claim.
Uninsured and underinsured motorist coverage protects you if you're hit by a driver who has no insurance or not enough to cover your costs. Personal injury protection or medical payments coverage can help pay medical expenses for you and your passengers after an accident, depending on your state's rules.
Optional coverages can add convenience and peace of mind. Rental reimbursement helps pay for a rental car while yours is being repaired, roadside assistance can help with breakdowns and towing, and gap coverage can be valuable if you owe more on your car loan than the vehicle is worth.
Review your policy regularly
Your coverage needs change as your car ages, your driving habits shift or your family grows. Reviewing your policy each year and comparing quotes periodically can help you maintain the right protection at a fair price. Bundling auto and home insurance may also lead to savings.
Finance Prime Online's insurance specialists compare auto policies across multiple carriers and explain every option clearly. Request a free insurance review to make sure you're properly covered.
