Car insurance policies provide many types of coverage, and to do so they include multiple coverage types. In order to wisely select the right coverage and limits for your situation, you must first understand the specific protections that each coverage provides. Here's a breakdown of seven commonly available car insurance coverage types.
1. Collision Coverage
Collision coverage is so-named because it insures your vehicle against damage that occurs during collisions, which insurance defines as accidents involving two or more vehicles. In other words, this coverage will pay to repair or replace your car if it's damaged in an accident where you hit another vehicle (or another vehicle hits you).
In the event that you're responsible for an accident, your car insurance policy's collision coverage will cover the damage to your car itself. If another driver is responsible, the collision coverage will initially cover the damage to your car -- but then your insurer will seek reimbursement for that cost from the other driver's insurance.
Collision coverage's limit is automatically set to the fair-market value of your vehicle, which your insurance company determines from many data points that are available to them. They frequently use sales, auctions, and appraisals of similar vehicles to determine the value of yours.
2. Comprehensive Coverage
Comprehensive coverage insures your vehicle against damage that occurs in non-collision incidents. These are incidents that don't involve at least two moving cars, and they may include:
- Tree branches that fall on your car
- Deer that you hit while driving
- Burglaries and vandalis
- Hail, wind, and flood damage
Since these incidents don't involve another driver, your insurer doesn't need to seek reimbursement for payments from another insurance company. Your policy's comprehensive coverage simply pays if you have a covered claim.
Like collision coverage, comprehensive coverage's limit is your vehicle's fair-market value.
3. Full Glass Coverage
Some policies offer an option for full glass coverage if you elect to get comprehensive coverage.
Full glass coverage eliminates your policy's comprehensive deductible for claims involving only broken windows and windshields. Comprehensive coverage includes broken windows within its protections, but claims require first paying a deductible that may be more than the cost of replacing a window. Full glass removes the need to pay out-of-pocket when fixing a window.
4. Gap Coverage
Gap coverage is a specialized protection that's required if you lease or finance a vehicle. It's not needed if you purchase your vehicle outright.
When you lease or finance a vehicle, the value of your vehicle depreciates faster than you make payments. This creates a gap between the fair-market value of your car and what you owe, and that gap isn't covered by collision or comprehensive coverage since their limits are equal to the value of your car. Gap coverage fills in this gap.
If your car is totaled, this coverage will pay the difference between your car's value and what you owe to your lender so that you can fully pay off the note. The payment from collision or comprehensive coverage can be used to pay whatever else is owed.
Unlike collision and comprehensive coverage, gap coverage includes insurance for both multi-vehicle accidents and non-collision incidents. The limit of this coverage is equal to the difference between your vehicle's value and what you owe.
5. Underinsured and Uninsured Motorist Coverage
Underinsured and uninsured motorist coverage protects you in the event that another driver who doesn't carry enough insurance strikes your vehicle in an accident. This coverage pays for damage to your vehicle and medical care required to treat injuries you or your passengers sustain in the accident.
In addition to covering accidents caused by improperly insured drivers, this coverage also covers hit-and-run accidents since the driver is unknown. You can select the limit for this coverage, and it can be quite high.
6. Medical Payments Coverage
Medical payments coverage insures people inside your vehicle against injury. If anyone in your car is injured, this coverage will pay for associated medical costs.
The limits for medical payments coverage is set when you set up your car insurance policy. Policies come with both a per-person and an aggregate per-accident limit for this coverage.
7. Personal Injury Protection
Like medical payments coverage, personal injury protection also protects the people in your car. This coverage is broader than medical payments. In addition to covering medical costs associated with injuries, personal injury protection also will cover lost income and increased childcare expenses following an accident.
Personal injury protection limits also include a per-person limit and an aggregate per-accident limit. You can choose both, and they can be quite high if you want a lot of protection.
These are just some of the many types of coverage that are available. Find a car insurance policy that has the right combination of coverage types for your situation with LA Insurance.