Types of Auto Insurance

Auto insurance types can be confusing - you might think that if there's an accident or something bad happens to you in your car the insurance company should just pay for whatever repairs or expenses you have and that would be the end of it. That is the way insurance used to work, in fact; the problem is that it was far more expensive than it is today. By splitting insurance into different types of coverage and allowing consumers to choose a la cartè insurance companies can charge only what is required based on customer choice and not for coverage they will not need.

Comprehensive Insurance

Comprehensive insurance pays for those incidentals that may happen outside of your typical automobile accident. If your car is stolen, comprehensive insurance will cover it. If your car is damaged, vandalized or destroyed while it is parked, that would fall into comprehensive coverage (assuming the insurance of whomever damaged your vehicle didn't cover it. Comprehensive insurance is not required by any state laws, but if you are leasing your car or buying it on a loan, you may be required by your lender to purchase and maintain coverage.

Collision Insurance

Just like its name implies, collision insurance is your security blanket if you get into a car accident and your car needs repair. Since state laws mandate that every auto on the road be covered by liability insurance, the odds that you will need collision have gone down considerably, and therefore, so have the prices for this type of insurance. Collision insurance only kicks in to pay for your vehicle damage if you are at fault in an accident in another car, (your liability insurance pays for their repairs and expenses, while your collision insurance will pay for yours), or if you are involved in an accident that is you're your fault and the other driver does not have insurance or you cannot collect from it for whatever reason. Collision is another type of insurance that is not mandated by state law, but may be required by your auto loan lender or car leasing company.

Liability Insurance

Liability insurance coverage is required by state law for any driver or vehicle on public roads or highways. It covers, up to its limits, the medical expenses of those you are involved in an accident with if it is your fault and also pays for needed repairs to their vehicle or property. Driving without liability insurance yields stiff penalties under the law if you are caught by the authorities, which becomes more likely every year as auto insurance companies are required to report a lapse in coverage to your state department of motor vehicles.