Every state legally requires car owners and operators to carry a certain minimum amount of auto insurance to cover the cost of any damage or injuries that may occur due to an accident. Depending on the state you live in, you may be required to have liability coverage, personal injury protection, and uninsured or underinsured motorist coverage.
This will pay for damage and injuries you cause anyone else in an accident. Almost all states require a minimum amount of liability coverage. Bodily injury liability will pay the medical expenses of others who are injured, and property damage liability pays to repair or replace their car or repair any property damage.
Personal Injury Protection
Also referred to as medical payments insurance, this covers your own medical costs. If you or any of your passengers are injured in an accident, this coverage steps in to take care of the expenses. It can also cover funeral expenses. It’s required in several states but works differently in each state. It can also cover lost wages and the cost to replace services normally performed by the injured person.
Uninsured Or Underinsured Motorist Coverage
Most states do not require this coverage. But, there are many uninsured or underinsured drivers on the road. You could sue them if they crash into you, but they may not have the money to pay. That’s when uninsured motorist coverage becomes useful. Similarly, underinsured motorist coverage pays if the other driver’s liability insurance doesn’t cover all your medical expenses.
Collision And Comprehensive Insurance
These types of insurance pay to fix your car or reimburse you for its current value in case it’s damaged beyond repair. It’s not mandatory in any state but, if you finance your vehicle, your lender will require you to have it. Collision insurance pays out if your car crashed into an object or another car, or if it flips over. Comprehensive coverage is in case your car’s stolen or damaged by anything other than an accident like a storm, animal hit, natural calamity, etc.
Leasing companies sometimes require customers to carry gap insurance. In case the leased car is damaged beyond repair, the gap insurance covers the difference between the claim check and the amount owed on the lease.