Several types of car insurance are put up by the state to remedy different kinds of car accidents and damages. I’ll show you the types of auto insurance you’ll need for specific types of car accidents.
Car insurance secures financial coverage whenever your car gets involved in a collision event. Some types of car insurance are mandatory in some states, while some are optional.
Whether you’re at fault for an accident or not, your insurance company is obligated to cover the expenses from damage to your car or bodily injuries to people involved in the accident.
You’ll get financially covered in an accident in exchange for a premium you pay regularly to the insurer. A premium is the money you pay to cover your insurance policy. It could be paid monthly, every six months, or every year.
15 Types of Car Insurance You Need During an Accident
Just got involved in a car accident? Don’t worry. Go over these different types of car insurance to see which one applies best to your situation.
Uninsured motorist coverage
One of the worst things that can happen to you is to get hit by a driver without car insurance. This is more common than you think, as one in eight drivers move around without car insurance.
Uninsured motorist coverage comes in handy in times like this, as it covers damage to your car property and medical expenses. Minimum uninsured insurance coverage is usually required of drivers in some states.
There are two kinds of uninsured motorist coverage. They are uninsured motorist bodily injury (UMBI) and uninsured motorist property damage (UMPD).
Uninsured motorist bodily injury caters to the injuries and medical expenses of you or your car passengers when the uninsured driver is at fault.
The uninsured motorist property damage handles the damages and car repairs you’ll undertake in an accident caused by a driver without insurance.
Underinsured motorist coverage
In a situation whereby a driver hits your car, and you find out that the driver’s liability limit isn’t enough to cover your car damages and injuries to persons, underinsured motorist coverage is paid out to cover it.
Like uninsured motorist coverage, underinsured motorist coverage also has two types.
First is the underinsured motorist bodily coverage which is doled out if the medical cost of you and your passengers is more than the insurance limit of the driver who is at fault.
The second type is underinsured motorist property damage which is given when the cost of repairs for the damaged vehicle is more than the underinsured driver’s limits.
This insurance is needed because you never can tell when you run into an accident with an underinsured driver.
Whenever you’re at fault during a car accident, liability insurance is immediately deployed to take care of the property damages of the other driver, as well as any injuries or medical expenses they might have.
Liability insurance is mandatory in almost every state, and you’re most likely to sign up for it first whenever you request a car insurance policy.
It is such a thorough insurance because it goes beyond just covering the cost of car damages and medical expenses. It also covers any court case fees and settlements that might arise from the accident you caused.
Two kinds of car insurance coverage are included in liability insurance. They are bodily injury and property damage.
Bodily injury liability insurance comes into play whenever there’s a case of injuries or death caused by you during an accident. It covers whatever cost that arises from injuries or death to the other driver, a pedestrian, or an onlooker.
Property damage liability insurance is given out whenever the car of the person you hit needs to be repaired or replaced. Property damage is also assigned when you destroy the property or equipment of someone else with your car, such as fences or mailboxes.
The money for liability coverage is paid up to the limit in your policy coverage. Any extra amount that is higher than your policy coverage limit will be paid from your personal funds.
What happens when your car gets damaged by an earthquake, a natural disaster, mob action, a falling object, or something that doesn’t involve a car collision?
You guessed right.
Comprehensive coverage insurance comes to the rescue. It covers all the repair costs to your car that were caused by vandalism, floods, theft, fire, and other non-collision events.
Most comprehensive coverage always comes with a deductible to be paid. A deductible is the amount you pay to repair your car pending when your insurance company covers the cost.
A higher deductible always means a lower premium for your insurance policy. Likewise, most insurers will give you a higher premium if your deductible is low.
Collision and comprehensive coverage are always packaged together by most car insurance companies. This is because they’re the opposite types of insurance policies.
While comprehensive coverage takes care of car accidents that come from non-collision events such as earthquakes, collision coverage is geared towards covering the costs of repairs when your car collides with another car, irrespective of who is at fault.
The good thing about collision coverage is that you’ll also get paid for damages caused by potholes or hitting an object.
A deductible is added to your insurance claim. Most times, your insurance check is reduced so your deductible could fit into it.
For instance, if you filed an insurance claim for a car repair cost of $5000 and your deductible is $1000, then your insurance check would be $4000.
Also Read: How Does Collision Insurance Work?
Medical payment coverage
Popularly referred to as MedPay, medical payment coverage handles the total medical expenses required for you or passengers in your car whenever there’s a car accident.
It doesn’t matter who is at fault, MedPay would cover the hospital and doctor visits for the human casualties in your car, surgery, emergency, nursing, and any health insurance deductibles that might arise.
Medical payment coverage is not yet available in all states.
Personal injury protection
Similar to MedPay, Personal Injury Protection (PIP) also reimburses you for all medical costs incurred for you and your passengers during a car accident, without minding if you’re at fault or not.
But it gets better.
PIP also supplies you monetary funds for any lost income that came about due to the accident and covers the cost of activities you might not be able to do while recovering such as reporting for work daily and house cleaning.
Even if you weren’t in your insured vehicle when you got into the accident, say you were on a bike and you got hit by a vehicle, PIP would still reimburse you.
Just like MedPay, PIP isn’t yet available in every state.
Gap insurance comes into play when your outstanding car loan is totaled due to a car accident or theft. A car being totaled means that it’ll cost your insurance company more than the value of the car to fix it.
So, if the depreciated value of your car is $10,000 and the car loan is higher at $15,000, a gap coverage of $5000 would be allocated to clear the remaining debt.
Gap coverage is simply the difference between your car loan and the depreciated value of your automobile.
It becomes necessary in cases where the car loan is higher than the amount your insurance policy covers. Gap insurance is used most times along with comprehensive and collision coverage.
Third-party insurance is one in which you consistently pay a premium to your insurance company in the event that a third party files a claim against you.
This claim could be in the form of bodily injuries or property damage.
For bodily injury, a third party could file an insurance claim to cover the medical costs that resulted from getting hit by your car.
Or you can find yourself in dire need of repairing the fence or mailbox of the neighbor’s home when you run them over with your car.
In both cases, whether for bodily injuries or property damage, third-party insurance would come to the rescue.
Most states require drivers to have a minimum sum of third-party insurance.
If your vehicle is being repaired after an accident and you’re about to start spending on transportation in the meantime, you can file a rental reimbursement coverage to cater for your transportation fare or car rental.
This is an optional auto insurance policy that comes with additional premiums.
Rental reimbursement typically comes with daily limits for a maximum number of days to be used. For example, your rental reimbursement could afford you the opportunity to use $50 a day for 60 days until your battered car is repaired and ready to use again.
If your car isn’t in active condition after the limit, you’ll have to pay the rental reimbursement out of your pocket.
New car replacement coverage
New car replacement coverage occurs when you’re given another car of the same model and type after your covered car got in an accident and was deemed totaled.
Usually, insurance companies pay an amount lesser than what you bought the car because of car depreciation. The moment you drive a new car out of that parking lot, its worth begins to decrease.
As a matter of fact, a car loses 20% of its value after the first year of ownership.
That’s why an insurer would give you a payout of a depreciated car, instead of the original amount with which you bought the car.
All that changes with the new car replacement coverage insurance.
If you bought a car for $40,000 and it has depreciated within the first year to $32,000 just before you got an accident, other insurance coverages would insist that the insurer pays you the depreciated sum of $32,000.
But with the new car replacement coverage, you get another vehicle of the same make and model as your damaged car worth $40,000 irrespective of the weight of depreciation, minus your deductible amount.
The new car replacement coverage isn’t available in every state, but to be qualified for it in those states where it’s active, you must have other full coverage insurance.
Also, this insurance policy is only eligible for cars that were recently bought.
There’s also alternative insurance to this called “better car insurance coverage” where your insurer replaces your damaged car with a newer version of it.
Classic car insurance
Classic car insurance provides a payout to old, vintage cars that are more than 25 years old. These kinds of cars are referred to as antiques.
Regular car insurance would prove insufficient to cater for the repair parts of classic cars as they’re costlier than regular cars, having been out of market for too long, or scarce at best.
To be eligible for the classic car insurance, the classic car must be maintained and modified to be in good working condition presently, at least 25 years old, shouldn’t be used regularly for commuting or racing, and should be kept away in an approved storage facility.
Classic car insurance offers collision coverage, liability insurance, and uninsured motorist coverage to cars that have been vetted as a classic.
Towing and labor coverage
What do you do when you’ve successfully avoided car accidents, but your car suddenly breaks down in the middle of the road?
What type of insurance would you need to cover the costs of getting the car up and running again?
You’ll need towing and labor coverage insurance.
This is an optional coverage that covers the cost of roadside assistance you’ll likely incur to get your car fixed and moving again.
It covers the cost of towing your car to a mechanic workshop, changing the car battery, changing oil or gas, payment of labor services for the mechanic or any other personnel that you hired on the road.
The only thing that towing and labor coverage doesn’t cover is the cost of car parts. For example, the cost of a battery will not be included in your coverage, but the labor cost for the mechanic to fix a new battery will be catered for.
If you happen to use your personal vehicle for a ridesharing company such as Uber or Lyft, then this coverage should be added to your existing auto insurance coverages.
The reason for this is that insurance companies don’t cover the cost of repairs for cars that are used for business purposes.
This includes insurance for cars used for any business from transportation to food delivery.
While state laws require most ridesharing companies to have insurance for their drivers, you might get your insurance policy canceled if your insurer finds out that you’ve been using your personal car to carry out commercial services.
It’s always best to get ride-sharing coverage whenever you intend on using your car to make money.
The rationale behind telematics insurance is that you can get insurance discounts if you drive less or drive safely.
With this, insurance companies set up a monitoring program inside your car to track how much mileage you drove and how safe your driving is. If you were found to have driven safely, you can get a discount from your insurer.
This is what’s known as telematics insurance or usage-based car insurance (UBSI).
Some tips used by drivers to get discounts for telematics insurance are to avoid driving at nighttime and rush hour, slow down on sudden acceleration, quick brakes, or drifting, and maintain a low drive mileage every year.
Each of these types of car insurance could be helpful to you in different scenarios. The key is to register for those that are mandatory under state laws and a few others that you’ll need from time to time.
Also Read: How to Get Car Insurance