Car insurance provides financial protection in case of accidents, theft, or other incidents involving your vehicle. The specific coverage depends on the type of policy you purchase. Here’s a breakdown of what car insurance typically covers:
1. Liability Coverage
What it covers: Damages or injuries you cause to others in an accident where you are at fault.
Includes:
Bodily Injury Liability: Covers medical expenses, lost wages, and legal fees for the other party.
Property Damage Liability: Covers repairs or replacement of the other party’s vehicle or property.
Why it’s important: Most states require a minimum amount of liability coverage.
2. Collision Coverage
What it covers: Repairs or replacement of your vehicle if it’s damaged in a collision, regardless of who is at fault.
Includes: Accidents with other vehicles, hitting objects (e.g., a tree or guardrail), or single-vehicle rollovers.
Why it’s important: This is optional but recommended if you have a newer or expensive car.
3. Comprehensive Coverage
What it covers: Non-collision-related damage to your vehicle.
Includes: Theft, vandalism, natural disasters (e.g., floods, hurricanes), falling objects, fire, and animal collisions.
Why it’s important: This is optional but often required if you’re leasing or financing your car.
4. Personal Injury Protection (PIP) or Medical Payments (MedPay)
What it covers: Medical expenses for you and your passengers, regardless of who is at fault.
Includes: Hospital bills, rehabilitation costs, and sometimes lost wages or funeral expenses.
Why it’s important: PIP is required in “no-fault” states, while MedPay is optional in others.
5. Uninsured/Underinsured Motorist Coverage
What it covers: Damages or injuries caused by a driver who has no insurance or insufficient coverage.
Includes: Medical bills, vehicle repairs, and sometimes lost wages.
Why it’s important: Protects you if you’re hit by someone who can’t pay for the damages.
6. Gap Insurance
What it covers: The difference between what you owe on your car loan or lease and the car’s actual cash value if it’s totaled or stolen.
Why it’s important: Useful if you owe more on your car than it’s worth (common with new cars or long-term loans).