Types of auto insurance coverage

If you are new to auto insurance, buying your policy can be a bit confusing at first. For a person who doesn't have insurance or financial background, understanding all the jargon found on websites or used by insurance agents can be tough. So to make it a bit simpler for you, here are some of the most essential things you have to know about auto insurance. In fact, all auto insurance policies are comprised of different coverage types, and understanding the purpose of each is very important for getting adequate auto insurance for your vehicle:

1. Property Damage. This type of auto insurance kicks in when you are at fault in an accident when the other party's car is damaged. It will pay for the necessary repair, regardless of what type of vehicle you were driving and what's the other car that you have ended up in. Not having such type of coverage will instantly force you to take loans or sell some of your assets for reimbursing the repair costs, especially if you have a collision with a more expensive car.

2. Bodily Injury. This form of auto insurance coverage will pay for any injuries caused to the other party in the course of an accident where you were at fault. In most cases, this coverage reimburses all the medical bills and sometimes pays for the lost wages if the injury has forced the other party to miss work. In case you or any of your passengers suffer any injuries, there's another type of insurance coverage that will pay for it.

3. Collision and Comprehensive. These are two distinct types of insurance coverage but in most cases they are bundled into a single product. Collision coverage will pay for the damage to your car due to a collision with another car, even if you are at fault. In case the car gets totaled, it will pay out the actual market value of the vehicle. Comprehensive coverage pays for the damage your car sustains due to circumstances other than collision with another vehicle: fire, theft, vandalism, etc.

4. Medical Expenses. This type of auto insurance coverage pays for the medical expenses you or any of your passengers have faced due to an accident, even if you were at fault. In most cases it will not only cover the actual medical bills, but will also reimburse lost wages, or pay out death benefits if someone dies because of the accident. 

6. Uninsured  and Underinsured Motorist. Unfortunately, there's a large number of drivers who do not carry any or sufficient auto insurance coverage on the road. Having an accident with such a driver with him at fault means that you won't be reimbursed for any expenses even if your car is damaged or someone is injured, because the other party simply doesn't have any financial abilities. Uninsured and Underinsured motorist coverage is designed for such cases, as it will pay out the needed amount of coverage as if it were the other party's auto insurance policy. It also applies to cases of hit-and-run drivers.