Best Types of Car Insurance in 2023
It’s important to know exactly what kind of coverage you’ll need before buying car insurance. The seven main kinds of car insurance and what they cover are listed below.
Collision car insurance
When your vehicle “collides” with another vehicle or a telephone pole, for example, collision insurance covers the damage caused by the collision. If you flip your vehicle or are the victim of a hit-and-run, collision insurance may also cover repairs, depending on your policy and location.
Comprehensive car insurance
This kind of insurance covers your car in the event that it is harmed by something other an accident, like a fire, a natural disaster, theft, or vandalism. Although having a policy may be advantageous, comprehensive insurance coverage is typically not mandated by state law, especially if you don’t believe you could afford the costs of an unforeseen repair or potential car replacement.
Full coverage car insurance
A set of coverages known as full coverage auto insurance safeguards your car in the event of an accident or external factors that cause damage. Full coverage insurance often cover liability, collision, and comprehensive risks. Full coverage may also include any coverage mandated by your state, such as medical payments (MedPay), personal injury protection (PIP), or uninsured/underinsured motorist coverage.
Gap insurance, often known as guaranteed asset protection, is for car owners who loan or lease their vehicles. Gap insurance pays the difference between the value of your car and the outstanding lease or loan balance if it is stolen or totaled. Any further accident-related expenses are not covered by it.
Let’s say, for illustration purposes, that the loan balance is $24,000 while the actual cash value of your car is $20,000. Gap insurance would reimburse the final $4,000 you’d otherwise have to pay out-of-pocket if your automobile was declared totaled.
Liability car insurance
If you are found to be legally at fault for an accident that caused property damage, bodily injury, or both, liability vehicle insurance coverage offers you financial security. It can also be relevant if someone else was operating your car at the time of the collision. State laws typically mandate liability insurance, but the precise level of protection you need can vary. Remember that damage to your own car is not covered by liability insurance.
Non-owner car insurance
You can be eligible for a non-owner auto insurance policy if you borrow, rent, or share a vehicle with another person. If you are at fault for an accident while driving someone else’s car, this sort of insurance offers minimum liability coverage. It can also protect you if you’ve misplaced your licence and need an SR-22 to get it reinstated. Each state’s minimal auto insurance requirements are typically met by non-owner automobile insurance limits.
Uninsured motorist car insurance
Financial protection is offered if you are involved in an accident with a driver who does not have liability insurance or flees the scene of the accident without disclosing their insurance information thanks to uninsured motorist coverage, which is mandated in 20 U.S. states and Washington, D.C. Underinsured motorist policy, which protects you if you’re in an accident and the at-fault driver doesn’t have enough insurance to properly cover the damage they did, is sometimes bundled with uninsured motorist coverage.