The type of Car Insurance coverage you get depends on the laws in your state (most states have some required minimum auto insurance laws), the value of your car, and how much of your own money you’re willing to spend if you get into an accident.
Collision coverage is pretty basic: it pays for damages to your car if you hit something.
Liability coverage is required by most states. It covers property damage and injuries to others caused by your car. So, if you drive through your neighbor’s fence, collision coverage covers the damage to your car and liability coverage covers the damage to the fence. Liability coverage is what you need if you’re in an accident and it’s your fault.
Medical coverage covers medical expenses that are the result of an accident. If you broke your wrist while driving through your neighbor’s fence, this coverage would take care of it.
Comprehensive coverage covers damage to your car that’s not the result of a collision. This is the kind of coverage you’d want if a tree fell on your car, or if it were damaged in a flood.
Personal Injury Protection is very similar to medical coverage. The difference is that medical coverage covers everyone injured in an accident, while Personal Injury Protection only covers you. It’s required coverage in many states; medical coverage tends to be optional.
Uninsured motorist coverage comes in two types. One takes care of damage to your car if it is hit by a driver who doesn’t have liability insurance. The other takes care of bodily damages (like hospital bills) to you or your passengers if you’re in an accident with a driver who doesn’t have insurance. It’s a good idea to carry both kinds; check with an insurance agent in your state to see how much you need.
Underinsured motorist coverage also has two types. The first will pay for damages to your car if it’s hit by someone who doesn’t have enough insurance to pay for the damage. For example, if your car gets hit by someone with only $2,000 worth of liability coverage and there’s $3,000 worth of damage to your car, underinsured motorist coverage pays the difference. You also need underinsured motorist coverage to cover injuries that you or your passengers may have if the other driver doesn’t have enough insurance to cover the damages.
Rental reimbursement will pay for you to rent a car while yours is in the shop due to an accident.