The last thing any driver wants is to be involved in a car accident, but the unfortunate truth of driving is that it isn’t always possible. In fact, around 3,700 people are killed globally in car accidents every day, which results in well over a million dead on a yearly basis. Despite this, not all car accidents will be fatal and when they occur you will undoubtedly be turning to your insurance company for assistance. Learn the ins and outs of car insurance, including the different types, to see what your options are following an accident.
Are Car Insurance and Car Warranty the Same?
First and foremost, a large amount of people confuse car insurance with car warranty. These two items are not the same despite functioning in similar ways. Car warranty is offered by the vehicle manufacturer or a third-party and offers coverage for breakdowns or various vehicle issues that result from mechanical problems or manufacturer defects. Car warranty does not offer coverage for damage that results from an accident or natural disaster, which is what it covers.
How Does Car Insurance Work?
Understanding how car insurance works can be difficult if you have never dealt with it before. Put simply, car insurance offers coverage for your vehicle in the event it is damaged in an accident, natural disaster, or some other similar situation. It does not cover damage due to generic mechanical breakdown. It will also offer some coverage for medical bill payments if necessary, whether those bills are your own or somebody else’s.
Everybody who has car insurance pays something known as a premium on a monthly basis or in full, which is the portion you pay in return for having insurance in place. The other factor of car insurance is a deductible, which is the total out-of-pocket expense you would have before insurance starts covering expenses.
6 Common Types of Car Insurance
As a driver, you can either choose to be fully insured against any possible situation or only partially insured with some bare minimum requirements for it. To that point, there are six primary types of car insurance that a person can consider:
1. Liability Coverage
As the most basic form of car insurance, liability coverage is almost always required in the states that make up the U.S. There are two primary forms of liability coverage: bodily injury liability and property damage liability. If you cause a car accident, bodily injury liability will help pay medical costs if the other party involved as injured as a result of your actions. Property damage liability will help to cover damages to another person’s property that were incurred.
2. Collision Coverage
Generally, collision coverage is an optional form of insurance that a driver can include. This form of insurance covers damage to your vehicle that resulted from being involved in an accident with another person or object. For example, if you lost control of your vehicle due to factors out of your control and hit a wall, this form of coverage might offer some compensation to your vehicle.
3. Comprehensive Coverage
This form of car insurance doesn’t protect against car accidents, rather accidents involving natural events. For example, fire, lightning strikes, flooding, and other similar situations would be covered under comprehensive coverage insurance.
4. Uninsured Motorist Coverage
Should you collide with a driver who is uninsured, uninsured motorist coverage will help you receive financial compensation since the other person does not have insurance. This type of insurance will help cover bodily damages or property damage costs that should have been covered by the insurance of the other person.
5. Personal Injury Protection Coverage
Personal injury protection insurance is a unique form of insurance as it is similar to another category known as medical payments coverage. PIP insurance will cover expenses that are medical but will also offer some compensation for issues such as lost pay as a result of missing work, childcare expenses, and other similar items.
6. Medical Payments Coverage
Finally, as mentioned previously, medical payments coverage will pay for specific medical costs that are incurred after an accident such as the cost of an X-ray, surgery costs, medical consultation costs, hospital visits, and more. Future medical costs that are directly related to the accident, but were not incurred immediately after the coverage, they may still be covered by medical payments coverage.
As mentioned, not all of the above forms of insurance are required by law. However, having full coverage while you are out on the road is one of the best ways to ensure that you are protected against anything that may occur. This will come at a higher cost, though, so it’s important to evaluate your current expenses before making this decision.
Which Types of Car Insurance Are Legally Required?
Car insurance is legally required in every state except for New Hampshire, which has special laws regarding coverage. Not having proof of car insurance is grounds for a traffic fine and driving without any insurance whatsoever can come with serious financial or legal repercussions. You may not need all of the above types of insurance depending on the state you live in, but you will legally be required to have basic coverage at a minimum.
How Much Does Car Insurance Cost?
On average, full insurance coverage costs around $2,014 per year whereas minimum coverage costs just over $600. This equates to an average monthly premium of $167 on average for full coverage and around $50 per month for partial coverage. Naturally, this is an expensive cost, but it is a required cost nonetheless.
Stay protected on the road today
Keeping yourself and other drivers protected on the road is your duty as a driver. However, you can’t control the actions of other drivers and some car accidents will occur despite your best efforts. Regardless of whether or not you caused a car accident, though, you will need to turn to your insurance company to get your vehicle repaired or claims paid for.
