Your car insurance may look different from someone else’s insurance, depending on factors such as residence and leasing or vehicle financing. Overall, there are six common types of auto insurance, as well as several additional types of auto insurance that you may want to consider. What type of auto insurance do I need?
How much car insurance do you really need to protect yourself, passengers and car? The three most important types of auto insurance you can have are liability insurance, comprehensive insurance and collision insurance. Think of them as the basics or coverage that you can’t afford.
Insurance protection does not protect you or your car, but protects your wallet! In the event of an accident found to be your fault, third party liability insurance covers the costs of third parties for which you are usually responsible – medical costs or car repairs that others may incur as a result of the accident.
How much liability insurance should you have? You can answer it in two words – a lot! Even if your condition does not require third party liability insurance, it is a good idea to have at least $ 500,000 insurance that covers both types of third party liability insurance – property damage and personal injury. In this way, the costs associated with repairing the second driver’s car (damage to property) are covered, as well as the costs associated with the loss of earnings or medical bills (injuries) that resulted from an accident due to fault.
Without third party liability insurance, you are responsible for paying for any damage to property and injury to the other driver. This may expose you to serious financial risk – and may even reduce your future earnings until you receive compensation. No matter what car you drive, liability insurance is definitely mandatory.
Other types of auto insurance
Depending on your needs and financial situation, you may want to add other optional insurance to your insurance policy.
Rental cost refund insurance
Rental reimbursement insurance helps pay for alternative transport, such as renting a car or public transport, when the vehicle is repaired. This type of insurance does not cover routine maintenance or renting a car while traveling – it starts when the car is damaged in an insured accident.
Towing or roadside assistance
This optional add-on can cover costs often associated with road accidents, such as waste batteries, used tires, locks or towing the vehicle to the workshop after an accident.
If there is a risk that you owe more car loans than the vehicle is actually worth, you may consider adding GAP insurance to your policy.
Take the time to find out exactly what types of car insurance – and how much – you need. Visit the website of the transport agency or office of the insurance commissioner in your state to find out what types of protection are required or optional in your state, as well as any minimum insurance amounts required.