Car insurance can be a murky world to navigate. For one thing, there are all kinds of different car insurance varieties. For another, different states require you to have various policies.
Since there's no universality with American auto insurance requirements, you must know what's going on in your state when you get your license. You can do that by going online and doing some research.
You might also find books on the subject. For instance, if you want to know about Pennsylvania auto insurance, books exist on that very topic. We'll talk a little more about car insurance basics now, so you have some idea of what to expect, regardless of the state in which you're a licensed driver.
We'll start by going over liability coverage, probably the most fundamental kind that exists. It is mandatory in most states, but not all of them. If you're in a state where you need to have it, you must have a policy covering you up to a certain dollar amount.
These policies often have two components. The first is bodily liability coverage. That covers costs another driver or pedestrian might incur if you hit them and injure them.
The other component is property damage liability. Your policy will pay for damage if you hit another person's property while driving.
Comprehensive car insurance is not actually a requirement in all states, but you should consider getting it, even if you are not legally required to do so. This coverage can help you pay if something happens to your car, such as if a flood damages it, lightning strikes it, a branch falls and hits it, etc.
This policy will often help you repair or replace the vehicle, but only up to the car's assessed value. In other words, if a branch falls and totals your twenty-year-old family sedan, you can't exchange it for a brand-new, top-of-the-line Porsche.
Uninsured and Underinsured Motorist Coverage
There will always be drivers out on the road that might hit you, and some of them may not have insurance. It's crazy to think that some people would be so irresponsible, but it does happen.
If this happens to you, you can sue them, but who can say when or if you will see any money from that?
In the meantime, you might have medical bills piling up, and you have to come up with a way to pay them. Maybe you have health insurance that can help you, but some people have hefty copays and deductibles they need to reach.
Uninsured and underinsured driver coverage will help you pay your medical bills and other expenses if a motorist with no insurance or the minimum required policy hits you. In some states, this insurance can pay for your damaged vehicle repairs as well.
You can make a case for not needing uninsured motorist coverage or possibly even comprehensive coverage. There are tons of people who don't get those policies because they feel like they're excessive or too expensive.
Some states don't require collision coverage, but more times than not, this is another one that you should get. If you decide not to, it can come back to bite you sometimes.
Collision coverage helps you repair or replace your vehicle up to its cash value. In other words, if you strike another car, it is your liability coverage that will pay to replace their vehicle. However, it is your collision coverage that will replace yours.
Many people get only liability coverage but not collision because they incorrectly believe that if they hit another vehicle, their liability coverage will pay for the damage to both cars.
That is inaccurate, though. If you want to cover both your vehicle and theirs, you need that collision and liability policy combination.
Medical Payment Coverage
There is also what the insurance companies call medical payment coverage. That's a policy that specifically covers medical expenses having to do with your injuries or a family member's injuries if they're in the car when a crash happens.
If you don't have regular health insurance, this can be what saves you in some instances. You can use this coverage to help with things like ambulance rides after the accident, X-rays, MRIs, surgeries, and more.
As you can see, several car insurance varieties exist, and keeping up with all of them isn't easy. If you are not positive which ones to get, you can always talk to an insurance broker.