Insurance policies come in many types and flavors, and sometimes it's hard to distinguish between them. Here is an article by Subhobrata S Basu that explains those differences.
The 5 Types of Auto Insurance Coverage
An auto insurance policy includes as many as six types of insurance coverage which ensures that each and every driver has what he needs. The protection is very broad covering a plethora of common events for which you can file a claim, if such a situation arises. The different types of coverage are all optional in nature and your premium will increase if you add it to your main policy. The right type of coverage, however, is very important as it can save you from a lot of financial loss. Moreover, a person will not be under such a huge stress in those situations. Let us take a look at the 5 major types of auto insurance coverage.
1) Liability Coverage
It will not cover any expenses that may arise due to damage to your property but it will pay for those things suffered by the other party in an accident. However, it needs to be proved that you were at fault in the accident. There should be a minimum of liability coverage otherwise you will not be allowed to legally drive a vehicle in any state in the US. The coverage is only effective when you are driving your own car or your friend's car but with his permission.
2) Collision Coverage
Collision coverage will cover all expenses related to the repair of the car in case of a covered accident but if the repairing cost is much more than the value of the car then you will get back only the value of the car. However, it is always suggested that you do not buy these coverages if you have an old car.
3) Comprehensive Coverage
As the name suggests a comprehensive coverage will cover all types of losses that one may incur but nothing that emanates out of an auto accident. The damage to your car must be due to something else but definitely not another vehicle. It can be fire, flood, earthquake, hail storms or hurricanes. The coverage is also applied when your car gets stolen or if you hit an animal. Many people buy this coverage in addition to an existing coverage.
4) Personal Injury Protection
Everyone should buy this coverage for their own good. The cost from an accident may increase in no time and this is where a Personal Injury Protection becomes helpful. The medical bill of all the passengers including yours will be fully covered. However, this type of coverage is not offered in all states in US.
5) Underinsured Driver Coverage
If you are involved in an accident and your driver has the minimum amount of liability coverage but not any other coverage to take of all the losses then this coverage will cover all kinds of medical bills, the wages that has been lost and damage to the property. In some states the cost of a rental car is also covered but only till your own vehicle is fully repaired.
Source: EzineArticles.com.
1) Liability Coverage
It will not cover any expenses that may arise due to damage to your property but it will pay for those things suffered by the other party in an accident. However, it needs to be proved that you were at fault in the accident. There should be a minimum of liability coverage otherwise you will not be allowed to legally drive a vehicle in any state in the US. The coverage is only effective when you are driving your own car or your friend's car but with his permission.
2) Collision Coverage
Collision coverage will cover all expenses related to the repair of the car in case of a covered accident but if the repairing cost is much more than the value of the car then you will get back only the value of the car. However, it is always suggested that you do not buy these coverages if you have an old car.
3) Comprehensive Coverage
As the name suggests a comprehensive coverage will cover all types of losses that one may incur but nothing that emanates out of an auto accident. The damage to your car must be due to something else but definitely not another vehicle. It can be fire, flood, earthquake, hail storms or hurricanes. The coverage is also applied when your car gets stolen or if you hit an animal. Many people buy this coverage in addition to an existing coverage.
4) Personal Injury Protection
Everyone should buy this coverage for their own good. The cost from an accident may increase in no time and this is where a Personal Injury Protection becomes helpful. The medical bill of all the passengers including yours will be fully covered. However, this type of coverage is not offered in all states in US.
5) Underinsured Driver Coverage
If you are involved in an accident and your driver has the minimum amount of liability coverage but not any other coverage to take of all the losses then this coverage will cover all kinds of medical bills, the wages that has been lost and damage to the property. In some states the cost of a rental car is also covered but only till your own vehicle is fully repaired.
Source: EzineArticles.com.
Thank you very much, Subhobrata!
Nadav
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