Understanding The 3 Main Types Of Auto Insurance

While there are a wide variety of different coverage options which can be included in your auto insurance policy, there are three main types of coverage that you will need to understand. Understanding what is included in each of these three coverage options will ultimately ensure that you are able to choose an auto insurance policy that meets your needs. Understanding these different coverage options will also help to ensure that you do not end up paying for any coverage that you do not need. Continue reading to learn more about the three main types of auto insurance coverage.

#1: Liability Coverage

Drivers are required by law to carry liability coverage as part of their auto insurance policy. This is because liability coverage protects the other drivers on the road from financial loss in the event that they are hit by another driver. If you cause an accident, your liability coverage will take care of paying for any damage to the other driver's vehicle, as well as covering any medical expenses or other financial losses which they may incur. While the state you live in will mandate the minimum amount of liability coverage that you must carry, it is often a good idea to purchase additional coverage in order to ensure that insurance covers all out-of-pocket expenses in the event that you ever cause an accident. 

#2: Collision & Comprehensive Coverage

The purpose of collision and comprehensive auto insurance is to protect you from financial loss in the event that your vehicle needs repair. If you are found liable for causing an accident, your collision coverage will pay to either repair or replace your vehicle depending upon the extent of the damage. If your vehicle is damaged due to circumstances other than an accident, your comprehensive coverage will kick in to cover the cost of these repairs. For example, damage done as the result of severe weather will often be covered by comprehensive auto insurance. If your vehicle is currently being leased or financed, you may find that your lender requires you to carry this type of auto insurance coverage. 

#3: Underinsured Motorist And Uninsured Motorist Coverage

There is always the possibility that you will be involved in an accident with a driver who either has no insurance or who does not have enough coverage to fully cover the value of your vehicle. In this situation, you could find yourself facing some rather significant out-of-pocket expenses even if you are not legally liable for the accident. Carrying underinsured motorist and uninsured motorist coverage will allow you to file a claim with your own insurance company for these expenses rather than paying for them out of your own pocket. 

To learn more, contact an auto insurance agency in your area such as LH Griffith and Company.