Five different types of car insurance (and how to save money on each)
Whether you are buying auto insurance for the first time or switching providers, selecting the correct type of coverage is crucial. Ideally, you want a solution that provides adequate coverage at a fair price.
The good news is that there are several types of car insurance that you can choose from, depending on your needs. Here are five of the most popular and how to save money on each.
1) Bodily injury and property damage (BI/PD) car insurance
This is the most basic type of auto insurance required by law in most states. It covers your liability for damages that you cause to another party in an accident for which you were at fault.
However, you must remember that BI/PD auto insurance only covers personal injuries and property damages suffered by the other driver, not yourself or other passengers in your car.
Ideally, when looking for BI/PD coverage, do adequate research to ensure you are getting the right type of coverage for your needs and budget. But that shouldn’t be difficult.
With the right local comparison tool, you can compare different insurance companies based on price, coverage, and ratings. For example, if you live in Chicago, you can check out a local insurance comparison resource, such as Motor1, to compare coverage and rates in Chicago from different auto insurers.
2) Personal injury protection (PIP) insurance
Also known as no-fault insurance, personal injury protection pays for injuries that result from a car accident, no matter who is at fault. PIP covers medical expenses, lost wages, and other out-of-pocket costs related to treatment and recovery.
While PIP is not legally required in most states, it is a great way to protect yourself financially if you are involved in an auto accident. Besides comparing auto insurance quotes from various companies in your area, keeping a clean driving record can help you find affordable PIP.
3) Collision car insurance
When you get into an accident, the chances are high that your car will be damaged. But fixing the vehicle on your own can be expensive. That’s why it’s highly recommended to get collision coverage on your policy.
A collision insurance policy covers repairs or replacement of your car if it gets damaged in an accident. Typically, this coverage also protects against minor collisions like fender benders.
While collision coverage is not required by law in most states, getting one can help keep the cost of auto repairs down and protect your investment if you get into a severe accident.
4) Comprehensive car insurance
Comprehensive car insurance covers damage to your car resulting from various incidents except for collisions. These include vandalism, theft, natural disasters, falling objects, fire, and theft.
Like collision car insurance coverage, comprehensive car insurance coverage is not compulsory in most states. However, it is an excellent way to protect your vehicle against unexpected damage and keep it in good condition.
Different insurance companies offer varying coverage limits and deductibles. So, be sure to compare the terms and costs of various insurers to find the most affordable option.
5) Uninsured/underinsured motorist insurance
While most states require all drivers to have auto insurance, many motorists on the road are uninsured or underinsured. That means they don’t have enough liability coverage to pay for damages they cause to others in an accident.
The good news is that carrying an uninsured/underinsured motorist (UM) policy can help protect you if you are involved in an accident with a motorist who has inadequate insurance coverage or no insurance. This coverage often covers medical expenses, property damage, and other expenses related to the accident.
However, uninsured/underinsured motorist coverage comes at an extra premium cost, so only purchase it if you need the extra security it provides. The best bit is that you can still find a good deal if you take the time to shop around and compare what different providers have to offer.