Within the United States, there are different types of car insurance with very different coverage, rates, and contracting modalities. Many of them are essential requirements to drive legally in a county or state. In addition, they are also usually a requirement to register the car in the name of its owner or to renew the documentation of a license plate annually.
6 Different Types of Car Insurance, Modalities, and Coverage
Commonly, auto insurance policies are subdivided into different categories. Auto insurance prices, deductibles, and copays are adjusted to the contracted package and to the internal policies of the insurance company that provides the service.
For them, there are many types of car insurance coverage. However, this economic variation is usually classified within the following types of financial and medical protection for the client:
- Personal Injury Protection or PIP
If you’re wondering what type of auto insurance is right for you, chances are you’ve already considered an offer that includes personal injury protection. The PIP is present in all policies, as it is a basic transit requirement in different states of the United States of America.
Within the different types of car insurance, the PIP covers some of the medical expenses of everyone present in the vehicle when the collision occurs, including the policyholder. This is regardless of whether the accident is the fault of the affected party.
Other expenses such as a funeral budget, physical rehabilitation, or child care during hospitalization can be included in this coverage. Although these benefits are given according to the modality offered by the insurer.
- Coverage for Uninsured Drivers
Perhaps it is one of the most unknown coverages when you start a search for what types of car insurance exist. However, it is one of the most advantageous from a financial prevention perspective. It is presented as the payment of expenses that cannot be assumed by another driver responsible for the collision due to a lack of vehicle insurance.
It also applies to make-up underpayments if the other driver’s insurance cannot fully cover the mechanical and medical bills left to you as the accident victim. Also known as uninsured motorist coverage, it is used to deal with the possible payment of damage to a hit-and-run driver. Among the different types of car insurance, this is ignored by many clients, since it is not cheap.
- Collision Coverage
Collision coverage exists to pay the economic expenses of your car when an accidental collision occurs with another vehicle in circulation. Normally, they contribute to the total repair of physical damage to the car and even, depending on the contracted policy, may include the replacement of the vehicle with another identical or similar car.
- Protection Against All Risks
If you want to summarize the different types of car insurance in full coverage insurance, you will find the answer. Total auto coverage is the sum of the benefits of several essential coverages within the same policy with the payment of a collective premium. They almost always consist of protection for the cost of repairing your vehicle and against damage such as vandalism, theft, or weather conditions.
They also usually include the maximum limits at the financial level of a PIP coverage. But they do not cover the bills of other affected drivers. It is usually a requirement for those who acquire their car through a loan or lease, and this obligation is released when the debt is paid off.
- Liability Insurance or Civil Liability Coverage
When you are evaluating what coverage package you need to circulate in your county, a Liability Insurance is presented as a requirement by the traffic authorities. Well, this form of financial protection is responsible for assuming the expenses of the other driver if you were to be to blame for the accident, as required by the law of your community.
Bodily injury and property damage typically have minimum amounts of coverage under this insurance. For this reason, civil liability policies are always a starting point to escalate to more complete protection.
Their cost structure is usually insufficient when the problem arises and they also do not take into account the financial needs of the person responsible for the collision. Among the different types of auto insurance, Liability is extremely important.
- Property Damage Coverage
Among the different types of auto insurance, coverage for property damage is the most unusual of all, but it can be very necessary for large accidents that alter properties near the event. That is to say, it consists of the partial payment of the repairs of a physical establishment or the road infrastructure, private or public, as a result of a vehicular accident.
Are There Other Special Coverages Within Car Insurance in The United States?
To these coverages of the different types of car insurance are added other forms of financial protection that are not so frequent in-car policies offered to first-time customers.
These variations that we mentioned are presented as very useful coverage when the client himself evaluates his degree of economic support in a real context. For this reason, they are usually included in the second year of the contract as an extra element that ends up giving more peace of mind and long-term economic stability.
- Rental Refunds
They are dedicated to paying for the rental of other vehicles during the period of repair or replacement of the car that has been affected by the accident. It is very advantageous when you take into account that these bureaucratic lapses can take a few months and a car is essential to move around in many cities in the country.
- Deficit or Deficiency Insurance
When a new car leaves the dealership, it immediately loses a good percentage of its market value. At the same time, most agency cars are paid for with financing and bank credit. Consequently, a deficit coverage pays the remaining % to pay off the total debt of a financed vehicle.
But it only happens when there is a mismatch between what the collision insurance offers and the amount that remains outstanding through payment installments. This can be seen in the different types of car insurance, as we will continue to explain below.
- Accident Forgiveness
It is the freezing of the cost of premiums after an accident to avoid an increase in future contracts due to a tarnished history. This situation is very advantageous considering that traffic history and credit history play a decisive role in setting premiums and deductibles.
- Coverage for Mechanical Breakdowns
This coverage is dedicated to the payment of mechanical maintenance that is not related to a traffic accident. As can be the unexpected breakdowns that are not connected with a general carelessness on the part of the owner.
- Shared Ride Insurance
This coverage is proving very successful in the current conditions, as it is intended for those drivers who use their vehicle for transportation services such as Uber and Lyft. It is also a requirement to travel under this type of work in many cities nationwide.