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Different Types of Car Insurance

Car insurance is an expense that every driver must incur in order to be within the law of most states in the United States. While there are different minimum requirements for each state, all drivers need to be covered by adequate protection in the event of an automobile accident. Medical costs and car repair bills can add up quickly and auto insurance is protection that all drivers need to have in order to safeguard them from potentially devastating financial problems. 

Depending upon a driver's needs, there are several types of car insurance to consider. For those who have purchased their car outright or are not required by their automobile finance company to carry full coverage insurance, liability insurance is typically the lowest cost alternative there is for legally required car insurance. Liability insurance only covers the costs of an accident caused by the insured and only covers the other party's damages. Many times the legal minimum amount of car insurance is not enough to pay for the resulting damages, so it is advisable to discuss the amount of liability insurance you need with your insurance agent. With liability insurance, it can be a problem if you cause an accident and your car is damaged or you are injured, as you are required to pay for your own damages on your own. Collision insurance is another type of auto insurance in which the insurance company will pay out for repairs to both cars in the event of an accident. In situations where the car is older, collision insurance may not be worth the added expense, especially if the car is not very expensive. 

Collision insurance and liability insurance are coverage policies that pay out in the event of a car accident. In the event a car is damaged due to vandalism or weather issues, comprehensive auto insurance is more beneficial. Even a collision with an animal is covered under most comprehensive policies. While convenient, comprehensive auto insurance is more costly than the basic liability or collision policies. The cost of a comprehensive auto insurance policy can be reduced if you fit your car with an anti-theft device or tracking system. 

Unfortunately, some drivers still drive without any insurance – not even the state required minimum. In this instance, if an uninsured driver causes an accident, there is no coverage of expenses as there is no policy. Uninsured motorist coverage is a type of auto insurance policy in which the driver is covered in the event of being in an accident with a driver who is uninsured. Although the law states the uninsured driver is financially responsible, most drivers who do not carry auto insurance are simply not going to have the money to pay for a lawsuit judgment either. 

No-fault auto insurance is available in some states and covers both personal injury and property damage resulting from an auto accident regardless of which driver caused the accident. A no-fault policy can be expensive and is not the most cost effective choice if your car is not very costly to replace.