Auto insurance coverage types and when you need them


There are several different types of coverage that are offered by insurance providers on your auto insurance policy. Depending upon the coverage, the risk is calculated and the auto insurance premium is accordingly determined. Here are some of the different types of coverage that you can ask for from an insurance provider.

Liability insurance

Liability insurance is considered mandatory by law. This offers damage cover for liabilities forced on the other party involved in an accident that was caused by your fault.

Comprehensive coverage

This is not mandatory. However, it is really important for a car that is new or has a high market price. This offers coverage for physical damages to the car caused by natural calamities like earthquakes, cyclones or floods. You will also receive coverage for damage caused by fire, theft, vandalism and other unforeseen events like a tree falling on your parked car.

Collision coverage

This offers damage repair coverage for physical damages that take place during an accident or collision. Both comprehensive and collision coverage are usually packaged into one and referred to as a full coverage. This is particularly important when your car is expensive and the damage repairs could cost you a lot.

Personal Injury Protection

Sometimes it may take a while to determine who was responsible for the accident. However, one cannot wait for the settlement to pay for medical expenses for treatment of injuries to passengers, sustained during an accident. Personal Injury Protection provides compensation for all medical expenses towards not only the car owner, but other passengers travelling in a car, irrespective of which party was at fault. This offers some peace of mind to car owners, as they don’t have to worry about liability insurance from the other end during accidents.

Uninsured motorist auto insurance

The liability insurance usually takes care of damage repair costs of your car in an accident that was caused by the other party’s fault. However, if the other party doesn’t have liability insurance, then you might have to bear the charges yourself. That is when uninsured motorist insurance could prove very useful as you will be paid damage compensation by the insurance provider.

Towing and rental car insurance

If your car is involved in an accident and is not in drivable condition, it will need to be towed to the service station. Towing insurance will provide for costs of towing a car in non-drivable condition after the accident. Similarly, if the nature of your profession puts you in absolute need of a car every day, then you should go for rental car insurance. When your car is actually being repaired, this insurance will provide for cost of renting a car for your personal needs.

GAP insurance and totalled car insurance

If you have a loan on your car, you will need GAP insurance. The value of a car depreciates very quickly. Sometimes, the loan amount due might be higher than the market price of the car. Your totalled car insurance after an accident, will only give you the market price of the car. The GAP insurance will provide for the remaining difference between market price and loan amount due.