Auto Insurance Coverage Types and Comparisons

Buying auto insurance is one of those chores which requires that we stretch our minds around subjects alien to most of us. We recognize the importance of obtaining auto insurance as a fulfillment of the legal requirement for all drivers, and the protection it offers in the distant possibility that we are involved in an accident.

To shop for insurance intelligently, we need to understand the minimum requirements and the types of coverage for our state of residence and decide if we need more than that. Nearly every state has compulsory insurance laws, with the exception of New Hampshire and Wisconsin. Most states require minimums for bodily injury per person and for all persons injured per accident.

Bodily Injury Liability Coverage
If you cause an accident in which the occupants of the other vehicle are injured, your bodily injury liability coverage is intended to pay for their medical expenses. Regardless of what the minimum requirements are for your state, the Insurance Institute of Highway Safety recommends that you bump it up to $100,000 per person and $300,000 per accident. Medical expenses are so high that it is wise to exceed the state's minimum coverage. An accident such as this will no doubt result in a mark on your driving record and increase in your an auto insurance rates.

Property Damage Liability Coverage
If you cause an accident in which you damage another person's vehicle, you are responsible for repairs to that vehicle. Due to the skyrocketing cost of automobile repairs and replacement parts, it pays to opt for higher coverage here as well.

Personal Injury Protection (PIP)
There are also 16 states which require that you carry coverage to pay for medical expenses for injuries to yourself and your passengers called Personal Injury Protection. You can skip this if you have good health insurance coverage, but it also covers lost wages and funeral expenses.

Uninsured/Underinsured Motorist Coverage
Many states require you to add this coverage in the event that you are injured by an uninsured driver or hit-and-run. Underinsured coverage is activated when the other driver's insurance coverage is not able to pay the full amount of your bodily injury and in some states your property damage claim.

Collision Coverage
As property damage coverage covers the other vehicle; collision coverage pays for damage to your vehicle. If your vehicle is "totaled," your insurer usually reimburses about 70 percent of the true value of the vehicle. If you decide, for the sake of lowering your premium, to set a higher deductible, expect more out of pocket for this accident.

Comprehensive Coverage
Often bundled with collision is comprehensive coverage, which covers natural phenomena like floods, wildfires, and man-made catastrophes like arson or theft. Comprehensive covers damages when you strike a deer on the road. It will also replace your windshield glass, but expect to pay a good deal more for this coverage.

No-Fault Auto Insurance
Currently twelve states plus Puerto Rico enforce no-fault laws for drivers, in which each driver collects for damages and injury from his own insurer. Most no-fault states allow coverage for first-party reimbursement but limit the ability to sue unless the case meets a set of guidelines.

GAP Insurance
Many car dealers who finance new car loans, may require an additional layer of security to cover their collateral, your new car. In the event of a theft or complete destruction of the vehicle, having GAP insurance will compensate all parties completely. Many new car dealers will either require GAP insurance or a comprehensive policy to hedge all bets.

Conclusion
Auto insurance offers huge protection against loss in an ever more costly society. The more assets you own, the more at risk you are to have them taken from you if you do not obtain the right amount of insurance, and the right type. It is equally as easy for a person to pay more for auto insurance while obtaining unnecessary coverage, than not buying enough. Informed shoppers who comparison shop can be more assured of obtaining the auto insurance coverage they need and can afford.