There are a few basic types of car insurance coverage. Liability insurance covers injuries and damage to other people when you’re at fault for an accident. Uninsured/underinsured motorist coverage (UM/UIM) helps pay for medical, legal, and funeral expenses if someone with little or no insurance hits you. Collision and comprehensive coverage are optional (unless your loan or lease requires them), but they offer essential protection.
Comprehensive car insurance isn’t available as a standalone policy, though it is usually sold with collision and liability coverage (aka full range). The average total cost is $2,148 annually. Like collision, complete typically comes with a deductible, which you pay before your insurer covers damages or losses. Although a higher deductible will result in a lower premium, you will incur more significant out-of-pocket costs if you need to make a claim. Various comprehensive deductible options are available from the best car insurance providers. To decide which deductible is right for you, consider how much your vehicle is worth and how often you expect to make claims. Select a higher deductible if you’re worried about your ability to afford high out-of-pocket costs in the event of an accident or damage.
Most lenders require drivers to carry collision and comprehensive insurance to lease or finance a vehicle. Complete, however, can be a great addition to your auto insurance coverage whether or not you’re in debt, helping you safeguard your investment and make sure you can keep driving for the long haul. Comprehensive coverage is also a good option for people who live in areas prone to natural disasters, like wildfires, hurricanes, and tornadoes.
As the name suggests, collision coverage pays for repairing or replacing your vehicle if it is involved in an accident with another car or an object, like a tree, mailbox, guardrail, or other entity. It also covers damage to your vehicle from a hit-and-run crash or a wreck caused by your negligence. It’s generally optional, although if you have a loan or lease on your car, your lender may require you to carry this type of insurance. Collision insurance limits are usually based on your car’s cash value minus your deductible. The more expensive your car is, the higher the limit you’ll want to choose. However, if you have an older car that’s not worth very much, it might not be cost-effective to get collision coverage. Collision and comprehensive coverage come with a deductible, so you’ll be responsible for paying the first part of any claim exceeding your deductible amount.
For this reason, it’s a good idea to choose a collision deductible you can afford to pay in case of a claim. Medical payments and uninsured/underinsured motorist coverage are optional car insurance policies that can help supplement your collision and comprehensive coverage if needed. These policies help cover your medical expenses and the costs to repair or replace your car if you’re hurt in an accident with a driver who doesn’t have liability coverage or enough to cover the total cost of your damages.
Liability insurance helps pay for the other person’s medical bills or repair costs if you are found to be at fault in an accident. It also covers damage to their vehicle and other property, such as lamp posts, fences, or buildings. States have different liability caps, but most drivers must have a certain amount of liability insurance to drive legally. Your driving history and the level of coverage you select could have an impact on your premium. The higher the limit, the more you will usually pay. The car type you drive and its value also affect the cost of the policy. For example, a sports car typically costs more to insure than an economy car. While “full coverage” auto insurance can mean different things to insurance companies and lenders, it is generally understood to refer to liability plus physical damage protection (comprehensive and collision). Collision pays for damage to your car after an accident with another vehicle or an object, such as a light pole. However, comprehensive insurance covers damage from non-accidental events such as storms, theft, and animal collisions. The liability policy is frequently supplemented with uninsured/underinsured motorists and personal injury protection. If an uninsured or underinsured motorist hurts you or your passengers, these coverages assist in covering losses or medical costs.
Uninsured/Underinsured Motorist Coverage
With one in eight drivers uninsured (and many more with liability coverage limits that are too low to pay for your costs after a crash), it’s essential to consider adding uninsured and underinsured motorist car insurance coverage to your policy. These two types of coverage—uninsured motorist property damage and uninsured motorist bodily injury—help bridge the gap between your expenses and the at-fault driver’s ability to pay. Uninsured motorist coverage, or UM, protects you, your housed family members, and other car occupants involving an uninsured driver (also known as a hit-and-run driver). This add-on coverage typically pays up to a specified limit for medical bills, pain and suffering, lost wages, and funeral costs if an at-fault driver has no insurance or insurance coverage that isn’t enough to cover your damages. When the liability coverage of an at-fault driver is insufficient to cover the total cost of your injuries sustained in an accident they cause, underinsured motorist coverage, or UIM, kicks in and pays your medical bills up to a predetermined limit. Like UM, UIM also typically has a per-person and per-accident limit.