Types of Car Insurance Coverage
Car insurance is insurance for automobiles, trucks, motorcycles, and any other road-going vehicles. Its primary function is to provide monetary protection against bodily injury or physical damage resulting from road accidents and against liability which can also arise out of accidents in a car. In the United States, there are several types of car insurance. Each type has different coverage at different levels. There are also various ways to buy a car insurance policy.
Liability covers damages caused by insured or authorized drivers against the owner’s liability. This is the commonest type of insurance. Usually, this kind of insurance involves an agreement between the parties, wherein the owner agrees to pay for damages suffered by third parties caused by his/her vehicle, in exchange for payment by the third party of fees related to the accident.
Collision and comprehensive coverages to take care of repairs and replacement costs for all damages sustained in an accident. The amount paid by the owner during the claims process is also recovered from the premium amount paid by the owner. A comprehensive policy may also include repair expenses for medical expenses incurred by the third party. Generally, this policy may have a higher premium rate than the liability policy.
Bodily injury coverage involves all expenses relating to legal and medical expenses caused by insured or authorized drivers in an accident, as well as property damage liabilities.
There are special laws which govern the limits of bodily injury coverage in different states of the United States. In such cases, bodily injury insurance may cover only a limited number of named accidents. The liability only extends up to bodily injury or property damage liability. It does not extend to liability arising from the negligence of the owner of the car in an accident. Therefore, the limit of liability in bodily injury coverage may be less than the bodily injury limit in the other types of coverage.
Underinsured or underfire insurance provides protection against the losses that would arise due to the conduct of drivers of insured vehicles who fail to pay the insurance premium due to negligence. Each state has prevailing laws on this issue. For underinsured drivers, if the insured vehicle is driven by them in an accident which he causes, the compensation paid by him to the other driver will be borne by the insurer. The same applies to uninsured drivers. For this type of coverage, underinsured/underfire insurance may be mandatory for all drivers.
Bodily injury liability coverages are mandatory coverage which helps in recovering the expenses from those who cause accidents and make claims.
These include medical fees, payment for rehabilitation of the injured person and pain and suffering. The amount of liability coverage varies from state to state, and the underwriting standards are different as well. Many companies offer all three types of coverage to their customers. However, many factors need to be considered before deciding upon the right policy.
Underinsured and uninsured motorist coverage protects the financial interests of people involved in automobile accidents that are due to the negligence of another driver. Bodily injury liability does not reimburse the expenses for medical bills incurred due to automobile accidents, but it does cover the costs for rehabilitation expenses of the persons who are physically injured in these accidents. Underinsured motorist insurance does not reimburse the expenses for personal injuries suffered by the passengers or passers-by in automobile accidents. It covers only the persons who are operating the other vehicle that is the subject of the auto insurance policy. Although this is the least popular of the three types of insurance coverage, it is more comprehensive than liability coverage.
Collision coverage provides protection against damage to the insured’s car that is the result of collisions with other automobiles. Underinsured or underfire motorists do not have coverage for damages to their cars that are the result of accidents. In case of theft or vandalism, the underinsured motorist insurance will cover the expenses. These are just a few of the types of coverage available under an auto insurance policy. Each state has its own laws regarding these types of coverage, so drivers should check with their states’ agencies for information regarding these requirements.