When considering what auto insurance coverage you should have in place, start with the minimum requirements set by your state. Insurance providers are required to offer at least this level of protection to all of its customers.
In most parts of the United States, third party liability protection is required by law. This is the part of the policy which pays for injuries and property damage claimed by the occupants of the other vehicle in an at-fault accident. It also pays a funeral benefit if the accident caused one or more fatalities.
Along with third party liability coverage, you will want to protect your own vehicle. Collision and comprehensive insurance provide protection from physical damage caused in an accident or from hail, flooding, fire, vandalism and other hazards. It also pays out if your car is stolen.
Medical payments coverage may be required if you live in a no-fault state. This type of insurance will pay for medical expenses incurred by you, your family members and passengers traveling in your vehicle following an accident. Depending on your personal health insurance plan, you could choose to buy the minimum level required by law or a policy which will provide a higher level of protection.
Uninsured and underinsrued motorist coverage is not required in all states, but it is a very good idea to put it in place. Uninsured motorist coverage pays for damages caused by a driver who doesn’t have insurance coverage. Underinsured motorist coverage comes into play when the at fault driver doesn’t have enough liability insurance to pay for damages caused in an accident.