Whether you notice it or not, we all share a close-knit bond with our cars. A car is probably one of the first investments that every adult would make at one point or the other in their lives. Investing in a car is one thing. Looking after it with proper maintenance and regular updates to your car insurance policies is an entirely different ball game. However, that’s not all. You still need to make sure that your car is fully covered with all-around protection. For this, you would probably need to shell out quite a lot of money. On average, it takes around $8,500 to meet all the car expenses annually. These would include money you would spend on gas, maintenance, repairs, and car insurance coverage options-related expenses.
Please note that insurance coverage varies by state, and the state you live in might have its own mandatory insurance requirements. Still unsure? Consider Way.com. Way.com provides all the details you need about the average car insurance cost, what an insurance premium is, and when car insurance goes down at the click of a button.
Liability Coverage
The liability coverage option is probably the most critical insurance coverage necessary for all car owners. This is regardless of the model of the car they drive. As the name suggests, Liability Coverage insurance covers the driver against damage caused to people or property from their cars in the event of a car accident. Regardless of how good a driver you are, accidents can happen, and probably when you least expect them. Sometimes, a car accident could result in the other person/driver being hospitalized or their car getting totaled/damaged.
Liability coverage will cover all the repair costs, medical expenses, and even provide funds for lawsuits. However, it should be noted that Liability coverage does not cover medical expenses for injuries or repair costs of your car. Liability coverage options can also be further divided into two: bodily injury and property damage. You can choose to have both options active and go with just one of the two if you are looking to slash expenses. Please note that most states require you to have valid liability coverage active to drive on the streets.
Personal Injury Protection Coverage
While liability coverage does not cover your injuries or repairs to your car in the event of a car accident, Personal Injury Protection (PIP) coverage does! However, there are set limits to the coverage, and the insurance only covers up to the expenses of the maximum premium you have chosen. On the flipside, Personal Injury Protection coverage options offer protection even if you get hit by a car while you are on foot. You will also be eligible for added benefits other than just medical protection when you have PIP. There are car accident cases where you could get injured enough to take days off from work.
Please note that while PIP does cover injuries on your body, it does not include any damage that you inflict in an accident on other people or property. Neither does it help pay for the damage to your car. If you think that your MedPay is adequate to cover your medical expenses, it is good to consider whether you need this scheme or not.
Collision Coverage
Having access to an affordable collision coverage insurance premium is a must for those who love their cars! Why? Well, cars are expensive and, at the same time, fragile. That’s not all; most of the spare parts are pretty expensive and could put a dent in your wallet quite fast. The more expensive your cars are, the costlier their spare parts will be. Having reliable collision coverage could save you both time and money. The best thing about collision coverage is that it covers the repair cost and has clauses to provide a replacement car if the damage is beyond repair.
Your deductions minus the actual cash value of your premium will cover the expense. Collision coverage is optional, and there are not many states that require it to be mandatory. If you are ok with shelling out dollars for car repairs, you can save up the extra bucks. Still, if you are an aggressive driver with an expensive car and are prone to speeding, it would be best to spend more money on collision coverage options.
Uninsured and Underinsured Coverage
Now, this is a vital section of insurance coverage that many people are unaware of. A recent study found that one in every eight Americans drives around without insurance or has insurance that cannot cover the liabilities. What happens if you, by your fault or not, get into an accident with an uninsured and underinsured driver? The obvious answer is to report the accident to your insurance company and file a claim. If the other driver does not have insurance to meet your needs, you will have to pay for the damage yourself. Also, you can file a legal lawsuit against the at-fault party.
However, a legal suit doesn’t guarantee the money you need to spend on car repairs and medical expenses. It depends on the verdict. The only option for you to get paid in such scenarios is to have uninsured or underinsured insurance coverage. However, please note that this is an entirely optional insurance coverage option. Only see this as an additional guarantee to help you out when you have co-passengers on board, in case of an accident. While collision and medical coverages have you and your car covered, they do not protect your co-passengers – you will have to handle their medical expenses from your pocket.
Comprehensive Coverage
Comprehensive insurance coverage is often one of the most misunderstood car insurance coverage options. The issue probably arises from the usage of the term comprehensive, which roughly translates to complete. However, the insurance policy is in no way complete. It only covers damage to cars caused by external factors. These factors are theft, natural disasters, vandalism, damage from hitting an animal, falling objects, fires, or explosions.
Comprehensive insurance policies only cover non-collision damage (apart from a collision with animals) or damage caused by things beyond our control. It does not cover damage caused due to driver error. Comprehensive insurance is optional across the country and should only be considered as an option for an additional guarantee. This coverage scheme is also suitable for people living in cities like Alaska, which regularly feature mild to extreme weather.
Renée Martin is a travel and car expert who focuses on road and air travel in the U.S. For the past 6 years, she’s been helping make driving and trip planning easier and budget-friendly for everyday travelers.
