Car Insurance Coverage

Do you have enough car insurance coverage? Many people neglect this topic until they encounter an accident. However, this is an important part of auto financial planning so in this article we will examine the different types of insurance coverage you can get.

Liability Car Insurance

Liability car coverage is essential and almost all states require a certain level of minimum liability insurance. This is because this is the coverage that pays for any damage you may cause, including bodily injury and property damage as a result of your automobile accident.

Collision Insurance Coverage

In case of a car accident this insurance coverage will pay to repair your car. Such coverage will be required if you have a loan against your car since in such a case your car will in fact belong to the lender who wouldn't want to get stuck with a wrecked car.

When the repair costs exceed a particular threshold of your car's value your car will be considered "totaled". In that case the insurance company will offer you to pay the actual cash value of your car.

Comprehensive Car Insurance

The comprehensive coverage pays for damages that are not incurred as a result of car accidents. This type of insurance will cover theft, fire, vandalism, natural disasters, etc. Windshield cracks also belong to this category and will be covered by this type of insurance coverage.

You may not be required comprehensive car insurance if you have paid for your car in cash or you have paid off you car loan.

Medical Payments (MedPay) and Personal Injury Protection (PIP)

In case of an accident this type of insurance coverage will pay for the medical expenses of you and your passengers. If you have good health insurance the PIP insurance coverage may not be really necessary. However, PIP is required in many states, so you may still be required the minimum amount.

Uninsured/Underinsured Motorist Coverage

The uninsured motorist coverage is required in many states and will pay for your medical expenses if the other party of the accident is uninsured or if you become a victim of a hit-and-run driver.

Similarly, the underinsured motorists coverage provides for medical bills coverage if you are involved in an accident caused by someone who doesn't have enough insurance. This type of insurance coverage is required in just a few states.

Additional Coverage

The following types of coverage may seem like luxury at first, but in the event of accidents they may save you a bundle.

• Towing coverage: This will pay for the tow if your car cannot be driven after the accident.
• Gap coverage: This will pay the difference between your car's actual cash value and the amount left on your auto loan if your car is totaled.

The information on this site and the car loan calculators provided are intended only to assist you with your car loans decisions without providing any personal investment advice. Since we do not consider your personal financial situation, we cannot and do not guarantee that the information provided here will be applicable or accurate to you. We advise you to seek personalized professional advice regarding your personal situation.

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