The Basics of Car Insurance: Understanding Your Protection Options

Finding yourself involved in a car accident on the road is a challenging situation, especially when you aren’t sure whether or not your insurance will be covering damages. There are a variety of protection options insurance can provide to a driver and understanding each will allow a person to ensure they have the coverage they need for all types of accidents. Learn the ins and outs of insurance so that you can be a more educated driver on the road.

​What is Car Insurance?

For newer drivers, the concept of car insurance may be somewhat confusing. All car insurance acts as is a safeguard for your financial and physical wellbeing while you are out on the road. In return for small monthly payments, car insurance companies will pay for applicable damages to your vehicle or body in the event of an accident or other situations. A basic form of car insurance is required by law around the country, which helps to reduce the financial burden drivers may be faced with when an accident occurs.

Car Insurance vs. Car Warranty

Oftentimes, people confuse car insurance with car warranty, and attempt to file an insurance claim for something that it does not cover. It’s worth noting that the primary difference between car warranty and car insurance is that car warranty only offers coverage against mechanical breakdowns. This means that if your vehicles engine overheats from everyday use, you can’t file an insurance claim to pay for the replacements. Likewise, you can’t contact your car warranty company to pay for body damages on your car that resulted from an accident.

6 Common Forms of Car Insurance

As a driver, it’s important to understand that there is more than just one form of car insurance, and not all of the additional types are required. This helps to ensure that regardless of what happens on the road, you will have coverage in one way or another. Specifically, there are six main forms of car insurance that a driver can consider which offer varying degrees of protection: 

1. Liability Coverage
   This is the basic form of car insurance that is legally required in almost every state around the country. It offers financial protection for the other party involved in an accident should you be found at fault. This means that if there is an accident that you cause which damages another person’s vehicle or causes injuries, your insurance company will pay for most of the damage. You may be liable to pay for the amount that your insurance company does not pay off. 
   
   
2. Comprehensive Coverage
   This unique form of insurance is often included when buying insurance coverage, and if offers protection for things other than traditional accidents. More specifically, comprehensive coverage can offer financial coverage against events such as natural disasters, trees falling on a vehicle, freak accidents, and more. 
   
   
3. Underinsured and Uninsured Motorist Coverage
   This specialty form of coverage is often not required when buying an insurance policy. Underinsured motorist coverage becomes active when you are involved in an accident and the other person does not have enough insurance coverage to meet the financial obligation involved with fixing the damage. Uninsured motorist coverage works in the same way, but only kicks in when the person you are involved in an accident with does not have any form of insurance. 
   
   
4. Collision Coverage
   Collision coverage insurance offers financial protection to your own vehicle by covering repair costs that resulted from a collision with something other than a moving vehicle. For example, a single car rollover, running into a barricade on the road, and more are all common times when collision coverage would kick in.
   
   
5. Medical Payments Coverage
   This specialty form of car insurance offers financial compensation to the policyholder that covers medical expenses resulting from an accident or single-car collision. It does not offer financial protection to other individuals involved in the accident. This car insurance is not required in the majority of states, with only two states currently requiring drivers to have it. 
   
   
6. Personal Injury Protection Coverage
   Finally, PIP insurance coverage is similar to medical payments coverage except for the fact that it will also cover indirect injury expenses, whereas medical payments coverage only covers direct injury expenses. This form of coverage is actually required in twelve states, making it arguable more important due to it being more comprehensive.

​At-Fault vs. No-Fault Insurance States

One special aspect of insurance that exist in the United States is the existence of at-fault and no-fault states. For example, Florida is a no-fault state which means that when you file a claim for a car accident in Florida, you do so with the other person’s insurance company. Additionally, drivers in no-fault states need to have PIP coverage so that medical expenses are covered, regardless of who actually caused the accident.

On the other side of things, an at-fault state is different in that drivers need to have bodily injury coverage in addition to liability coverage. This bodily injury coverage will pay for medical expenses that another person has following an accident that you are deemed at-fault for. The main difference between the two, in summation, is simply who is responsible for having the insurance which pays for medical damages. Regardless of whether you are in an at-fault or no-fault state, however, you will be responsible for paying for vehicle damage that you cause in an accident. 
Stay protected on the road today
Staying protected on the road isn’t always possible, even for the best of drivers. Getting into a car accident with another person, especially when it isn’t your fault, is a frustrating and jarring experience. However, by being certain you have the best insurance protection keeping you covered you can rest easier knowing any damage to your vehicle or body will be covered. If you discover you don’t have enough insurance to meet your needs, don’t hesitate to expand the policy you’re currently on.