Car insurance can be confusing but it is a necessary and important part of owning a car. But, there are multiple types of auto insurance plans, so how do you know which one to buy and which ones you can skip? Read on to know what the different types of auto insurance plans cover, so you can make an informed decision.
Bodily Injury Liability Plan
Every state in the U.S. requires car owners to have bodily injury liability. This plan protects your assets if you happen to cause an accident that injures or kills another. Although this plan is required by law, opting for just the legal minimum coverage may not suffice. Our recommendation is you opt for a high coverage amount, to ensure your assets are protected.
Property Damage Liability Plan
This plan covers you if you are involved in an accident that damages the property or vehicle of another person. So, if you hit somebody and their car requires work, your insurance company will pay for the damages.
Medical Payments Plan
This insurance covers the medical expenses that you or other passengers who were traveling in your vehicle may require due to an accident you caused. It doesn’t, however, cover other financial damages as a result of the accident like lost wages.
Uninsured and Underinsured Driver Coverage Plan
Both of these plans provide you coverage if you’re hit by a driver who does not have auto insurance or has been driving without sufficient insurance. Typically, these plans only cover bodily injury losses. However, in a few states, these plans also cover property damage.
Physical Damage Coverage Plan
Physical damage auto insurance can be of two types – collision and comprehensive insurance. Collision insurance covers damages to your car when you are involved in an accident – for instance, if you’ve backed into a large tree. Comprehensive insurance, in comparison, covers all sorts of damage to your vehicle. However, if you have an older car, it makes sense to cancel your comprehensive insurance since you won’t get as much from your insurance policy when you raise a claim, due to your car having a lower resale value.