Auto Insurance Explained

The most important thing to know about auto insurance is that it comes as a package of different coverage options. The second most important thing to know is that your package of coverage options needs to meet your state’s minimum auto insurance requirements for each type of coverage.

And each state has different minimums that need to be met.

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What else should you know about auto insurance?

If you’re interested in a car insurance policy that will offer you a comfortable level of protection from lawsuits or from car rental, towing or labor bills, you’ll need to choose from the available slate of riders and attachments.

Don’t worry: It’s not as complicated as it sounds.

The 6 Basic Components Of An Auto Insurance Policy

Here are the basics you need to know to help you shop for the best auto insurance policy.

• Bodily Injury Liability: Bodily Injury coverage is required by most states. It provides coverage for any injuries you cause to someone else.
• Property Damage Liability: This is another coverage type that will be required by most states. It covers any damage you cause to someone’s property.
• Personal Injury Protection: Better known as PIP Insurance. PIP provides for the treatment of injuries to the driver and passengers of the policyholder’s car.
• Collision Coverage: Collision is typically an optional auto policy component that covers any damage to your car that’s the result of a collision.
• Comprehensive Coverage: This coverage will protect you in case of any damage to your car that didn’t involve a collision. This includes theft, fire, and vandalism.
• Uninsured Motorist Coverage: This offers you protection if you’re injured in a collision with a driver who’s either uninsured or insufficiently insured.

The 3 Common Car Insurance Add-Ons And Riders

There are also a number of supplemental auto insurance coverage options. The 3 rider types listed below are available as add-on premium items.

• Rental Reimbursement Coverage: This is a fairly common rider that will cover you if you need to rent a vehicle to replace yours if it’s damaged or stolen.
• Towing and Labor Coverage: This covers your out-of-pocket costs in case of a flat tire or if your car breaks down.
• Gap Auto Insurance Coverage: Better known as an “Umbrella Rider,” a gap insurance add-on will pay out the difference between the actual cash value of your car and whatever amount is left on your auto loan if your car is totaled in an accident.

Not sure which plans are best for you? Use our free service to start comparing your options. Fill out a short online form, and you’ll be contacted by agents with free quotes.