November 15, 2023

Differences in Types of Auto Insurance Coverage

If it’s your first time owning a car, or you often find yourself confused by all the different types of auto insurance coverage, then this guide is for you.

It’s not expected for you to have a comprehensive knowledge of all the different coverage types available when it comes to auto insurance. Chances are, you’ve just agreed with the sales agent on what they’ve recommended, or you’ve taken a page out of a family or friend’s book of suggestions.

There are many differences in the types of coverage, which are worth knowing to ensure you have the right insurance for you and your vehicle. With that being said, here are some of the differences in types of auto insurance coverage that are available.

Liability Coverage

Liability insurance is a typical, standard part of most auto insurance policies. Chances are, you’ll see this as a required coverage for the state you live in.

With auto liability coverage, it provides protection in a number of ways. If you were to cause an accident in which another person is injured, then this type of coverage will help with any claims against you. It’s also good for helping with any coverage for any person’s property that you may have damaged with the vehicle itself.

The purpose of this type of auto liability coverage is to pay third-parties and not those who are holding the policy themselves. It’s a good type of auto insurance to have if you live in a particularly high-collision/accident area. Sometimes, there are areas where drivers are a little more reckless and lack safety awareness compared to other places.

No-Fault Coverage

With no-fault coverage, it’s sometimes also referred to as personal injury protection insurance. It can often help cover you and any of your passengers when it comes to medical expenses. It can also cover loss of injury, despite who is to blame for the accident.

What sets the no-fault coverage apart from other types of insurance like collision and liability insurance is that it reimburses for damages depending on who is at fault. As long as the accident is covered by the terms of the insurance, this type of coverage will help with all of the related costs that occur when an accident takes place.

For example, these expenses might include any of the following:

  • Any hospital or medical expenses
  • Funeral expenses
  • Income losses due to the inability to work

Collision Insurance

Collision insurance is a coverage that reimburses those insured for damage that was caused to their own vehicle due to the fault of another insured driver.

It’s a type of insurance that’s typically provided as an add-on to your policy. As an insurance option, it will repay the insured for damage from an actual collision. However, this means that if your vehicle has been stolen or damaged due to vandalism, it won’t be covered.

In cases where there are two drivers who are in an accident, but the damage might be from external sources (for example, a pothole), then the cover will pay for any damages that were caused by the object.

Collision insurance is one that is worthwhile to add to your policy if you can afford to do so. After all, every little bit of extra coverage will hopefully prevent you from having to pay out from your own back pocket.

Comprehensive Insurance

One of the most familiar insurances to have is comprehensive insurance. This type of coverage is also referred to as fully comprehensive cover - which can confuse some, who may think they’re two different insurance options.

This type of insurance will pay out if your car is damaged, if you damage someone else’s car, or if you injure someone in an accident. Regardless of fault, this policy will pay out and also covers you against fire and theft.

As the name of the insurance suggests, it’s a much more valuable insurance to have. However, the only coverage it won’t provide is the damage you might cause to your own vehicle.

As a result of this coverage, many drivers tend to take it out, as it provides them with exceptional coverage. You can typically expect this insurance policy to include many of the following:

  • Accidental damage to your car or another person’s car
  • Damage to other people’s property as a result of an accident
  • Cover for personal belongings that are stolen or damaged
  • Repairs to your windshield
  • Personal injuries connected to the accident

Uninsured and Underinsured Motorist Coverage

There’s nothing more frustrating or worrying than when you come into contact with an uninsured or underinsured driver. When it comes to uninsured drivers, it can be a nightmare to navigate getting money back for damages, especially when you want to claim on their insurance - or lack thereof - instead of your own.

This type of motorist coverage is therefore useful to have. Uninsured motorist insurance will protect you, should you be in an accident with someone who is at fault and doesn’t carry liability insurance.

It’s usually tied in with underinsured motorist coverage, which helps when the driver who is at fault has limits to their liability that are exceeded by the damages and coverage needed to be claimed. This type of claim has its advantages in that it prevents you from paying from your own pocket for a car accident you didn’t cause.

However, it’s important to know that it’s often more costly to add on when there are more uninsured drivers in your area.

While this type of insurance isn’t absolutely necessary to get, it is the type of insurance that you’d kick yourself for not getting if you were able to afford to at the time. Sometimes, the minimum liability insurance you get isn’t enough to cover all of the scenarios that might unfortunately end up happening to you. 

Consider Auto Insurance with Alpine Castle Lake Insurance

If you’re looking to determine how much coverage you might need and to find the best plan for your needs, get in touch with Alpine Castle Lake Insurance. We have expert advisors on hand and ready to find the best deal for your needs and budget.