Types of Auto Insurance Defined: Help for Consumers

Consumers who want to make good choices about the type of auto insurance coverage need to understand what they are buying, and checking out types of auto insurance defined can help this process immensely. Here are some common terms that all auto insurance buyers should know:

Bodily Injury Liability Coverage: Pays for personal injury claims made by the occupants of the other vehicle in a car accident. Covers medical bills, rehab expenses, and possibly lost wages. In some jurisdictions, claims for pain and suffering are included in bodily injury coverage.

Property Damage Liability Coverage: Compensates other driver for repairs to his or her own vehicle following an accident. Also pays for repairs to public property damaged or destroyed in the incident, including fences, guard rails, buildings, sheds, sign posts, light stands and mail boxes.

Collision Coverage: Pays for repairs to the policyholder’s own vehicle following an accident. If the car is totaled, the insurance company writes a check based on the car’s cash value, less the deductible the policyholder has agreed to pay.

Comprehensive Insurance: Another type of physical damage coverage; it pays out when the loss occurred from something other than a collision. Covers losses due to fire, theft, falling objects, hail, flooding, etc.

Uninsured Motorist Coverage: Pays for personal injury and property damage claims when the at-fault driver does not have any insurance coverage. Also pays for damages caused in a hit and run accident.

Underinsured Motorist Coverage: Tops up available coverage when the at-fault driver doesn’t have enough protection to pay for all damages caused in an accident.

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