Auto insurance policy types

Most states in the US (except three) have very strict regulations concerning auto insurance coverage. It is a legal requirement for a car to carry valid auto insurance coverage, otherwise the car owner can be subjected to a substantial fine or even custody. An auto insurance policy is a legal agreement between you and the insurance company stipulating the amount of coverage you can receive in insurance situations against a certain fee. There are different types of policies, designed for specific situations and cases. There are even policies that will cover you against all possible (and sometimes impossible) risks you can encounter with your vehicle. But such policies cost a lot. That's why most people choose different types of policies, which cater to their specific insurance needs. Here are some of the most common types of auto insurance policies you can purchase.

Liability

Liability policies pay for the damage or injuries delivered to third parties by your vehicle. It is a part of the tort law, which stipulates that your negligent behavior makes you responsible for any damage or injury resulted. This means that you will have to pay for any medical and repair costs delivered by the accident to the third party, and in case they take legal action against you, you will also have to settle legal fees. This is what a liability policy will pay for if you purchase it.

Collision

This type of auto insurance pays for all the damage to your car resulted from a direct collision with another vehicle. Most collision policies usually cover only against car-to-car hit, however you may find auto insurance policies that will also pay for the accidents involving infrastructure or environment (walls, poles, tress, etc.)

Comprehensive

Comprehensive auto insurance coverage is used to pay for any damage that results from circumstances other than traffic accidents. This usually includes all natural disasters (fire, flood, earthquake), political riots, terrorist attacks, technological disasters, theft and vandalism. Make sure to study your policy carefully because the list may not include certain situations you want to be covered against (flood or tornado).

Medical

Medical auto insurance is usually an optional type of coverage you can include in your policy. It pays for any medical expenses arising from the accident your car was involved in, regardless whether you were at fault or not.

Personal Injury Protection (PIP)

Personal injury protection, as the name suggests, pays your medical bills if you were injured in a traffic accident while being in the covered car, no matter who was at fault. In some states this type of auto insurance is compulsory.

Uninsured or underinsured driver

There are a couple of million drivers out on the road with insufficient coverage or no auto insurance at all. There are different reasons for this. Some drivers blame that cheap auto insurance is long gone and they can't afford good coverage, while others believe that they are pretty good drivers and don't need any auto insurance at all. Regardless of the cause, when you have an accident with such a car owner the lack of coverage will make it impossible for you to cover the damages or injuries delivered to you and your vehicle. That's what uninsured driver auto insurance is for - it covers repair and medical costs in cases when you have a traffic accident with such drivers.

In addition to these types of auto insurance policies there are different types of specific coverage you may add to your existing policy. For example, you may add rental car coverage that will pay for rental costs while your car is in the repair shop. Ask your insurance agent about your options.