The Different Vehicle Insurance Types, And What Each Auto Insurance Type Usually Covers

There are many different types of auto insurance, and the type you have determines exactly what is covered if you file a claim. Knowing what the different types of car insurance are, and exactly what each type covers, can help you make sure you have the car insurance coverage you want when you need it the most. There are three main types of car insurance, liability only auto insurance, also called PLPD by some, comprehensive auto insurance, and collision car insurance. All three of these types will cover different things, so make sure you know what you want covered in the event of a claim so that you choose the right vehicle insurance policy.

Liability auto insurance is the bare minimum that most states require for you to drive your vehicle. The coverage amounts that you need under this vehicle insurance policy will vary according to the state you live in, and these minimums are set to ensure coverage to people and property other than your own. If you are going to carry just the minimum auto insurance required, you should check with your car insurance company to make sure that this amount will protect you completely. In some states, if you only have the minimum car insurance coverage, the other driver may come after you legally for the remainder of the cost of the damage you caused. It is wise to have a car insurance policy that is above the minimum coverage amount, to ensure you do not incur big expenses if an accident occurs. Liability only vehicle insurance does not cover the damage you do to your car or property, only injury or damage to others.

Comprehensive car insurance may also be called other than collision, or OTC, auto insurance. This type of auto insurance covers a wide variety of events that are not usually within your control. If your car is stolen or taken for a joyride by teenagers, comprehensive car insurance would cover this claim. This vehicle insurance coverage would also cover you if you hit a deer or other animal. A comprehensive auto insurance policy also includes any damage done by weather and acts of god, such as hail damage or a lightning strike. This car insurance covers the damage to your vehicle, so that you do not have an enormous expense. Your auto insurance premiums will cost more if you add on this coverage, because this policy covers your vehicle as well.

Collision auto insurance can be added on to a comprehensive insurance policy for an additional cost. Many times collision coverage is optional. The one exception is if you have financing on your car and still owe money on the loan. Most finance companies require that you keep full coverage car insurance, which is a combination of all three vehicle insurance types, so that in the event of an accident they can get their loan repaid. Collision auto insurance covers your vehicle in the event of a car accident with another car, or other property, regardless of whose fault the accident was. This car insurance coverage will pay for the repairs, unless your car is totaled, and then the auto insurance company will issue two checks, one to the finance company for the balance of the loan, and one to you for the remainder of the payout on the claim.