As a new driver, you might not know yet that car insurance is a legal necessity. Even if you own a car, you might neglect the importance of certain insurance policies. If car insurance is new to you, don’t worry. Read on as we explain the most important things you need to know about these six types of car coverage — and why it’s necessary for everyone who gets behind the wheel.
Liability car insurance
Liability car insurance is the most basic type of car insurance. It means you are protected if you are responsible for causing an accident. For instance, if you get into a crash with another driver, and it’s determined in court that you were at fault, your liability insurance will pay for the damages that result from the collision.
Liability coverage isn’t required by law in every state. If you live in a state where liability car insurance isn’t mandatory, it’s still a good idea to have some coverage. You can get a low-cost policy to cover only your liability and save on other coverages like collision or comprehensive.
Collision car insurance
Collision coverage may be required by your state’s laws and your car loan or lease agreement. This type of coverage pays for damages to your vehicle if you accidentally hit someone or something (a tree or pole). Your collision insurance will also take care of any medical bills or other costs that come up as a result of the accident.
It’s important to make sure you have collision coverage, especially if you’re leasing or financing your vehicle. This is because if you pay for any damage out of pocket, it’ll be recorded on your credit report, which could negatively impact your ability to rent or buy a car in the future.
Comprehensive car insurance
Comprehensive car insurance covers many situations that might leave you paying out of pocket for car-related damage. While collision insurance will cover you for anything resulting from a collision, comprehensive insurance protects you from everything else.
Whether it’s theft, vandalism, weather events like flooding and hail, or hitting an animal, comprehensive insurance can give you peace of mind without breaking the bank. If you have a car loan or lease, you may be required to carry comprehensive insurance. This coverage is also important if your car gets damaged unexpectedly and you can’t afford to repair it.
Personal Injury Protection (PIP)
Personal Injury Protection (PIP), sometimes called “no-fault coverage,” is an insurance option that will financially protect you if you’re injured in an accident. It helps pay for your medical expenses and can even cover lost income, childcare, and funeral expenses.
If you live in states where PIP is required by law, make sure you have it. Even if PIP is not required in your state, we recommend getting it because it can protect you against exorbitant medical bills.
Uninsured/underinsured motorist coverage
The most significant advantage of this coverage is that it protects you from drivers who don’t have any insurance at all. It also covers you if the other car’s driver was insured, but the insurance company refuses to reimburse your claim.
In some states, drivers are legally required to carry uninsured/underinsured motorist coverage; in others, it’s optional but worth considering. Insurance companies often include it in their standard policies, so check with your insurance agent to see if it’s part of your policy and how much it costs.
Medical Payments (MedPay) coverage
MedPay covers accident-related medical expenses for you, your passengers, family members, and other policyholders. It also covers copays and deductibles for health insurance and PIP policies. This coverage type is similar to PIP but more limited.
If you’re a driver in Maine or New Hampshire, you are required by law to get MedPay. If it is optional in your state, consider purchasing it to supplement existing health insurance and PIP coverage.
