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5 Types Of Car Insurance

Uninsured Motorist Coverage /underinsured Motorist Coverage

Understanding 5 Types of Car Insurance Coverage

This covers you if you are in an accident with a driver who does not have any liability insurance, or is underinsured.

The insurance company must offer you this coverage. If you choose not to buy it, you must sign a form, called a waiver. The form says you were offered the coverage and turned it down.

  • Uninsured motorist bodily injury : This pays for injuries to you and any person in your car when there is an accident with an uninsured driver who is at fault. The limits are the same as your liability coverage limits.
  • Underinsured motorist :This covers limited costs for bodily injury if you are in an accident with a driver who does not have enough insurance to pay for damage
  • Uninsured motorist property damage : This pays for the damage to your car from an accident with an uninsured driver who is at fault. The limit is $3,500. This only pays if the uninsured driver is identified. You may not need it if you have collision coverage.

What Are The Five Types Of Car Insurance Coverage In India

Insurance coverage refers to the kinds of protection available. Along with basic coverage under the policy, you can choose a number of add-ons to enhance the protection under the policies. Let us first show you the five types of car insurance coverage available in India:

1. Third-Party Liability Only Cover

Under this type of car insurance coverage, you will get the following benefits:

  • Cost of repairs/replacement of the damaged vehicle of third parties
  • Cost of hospitalization and treatment of third parties
  • Liabilities arising out of death of third parties

According to the Motor Vehicles Act, third-party car insurance coverage is a must to drive on the roads. The sum assured should be according to the driving conditions and sufficiently high to avoid out-of-pocket payments from your side.

2. Collision Damage or Own Damage Cover

When you opt for collision damage car insurance coverage, the cost of repairs to your vehicle that has been damaged is reimbursed. To determine the cost of collision coverage, its age and Insured Declared Value are taken into account to arrive at the premium. The IDV is based on the market value of the vehicle.

When a claim is lodged under collision coverage policy, the maximum amount payable under the policy is given by the IDV less accumulated depreciation. If you have purchased your vehicle on a loan, you should hold collision cover.

3. Personal Accident Cover:

4. Zero Depreciation Insurance:

5. Comprehensive Car Insurance:

What Is Comprehensive Insurance

Comprehensive insurance is coverage that helps pay for the cost of damage to your vehicle when you’re involved in an accident not caused by a collision. Comprehensive car insurance covers losses from things like theft, vandalism or extreme weather events.

Comprehensive coverage is never required by state law, but it is usually needed for cars that are leased or full answer

What Comprehensive Insurance Covers

Why You Should Get Comprehensive Insurance

You should consider buying comprehensive coverage if you cannot afford to pay out of pocket to repair or replace your car in a worst-case scenario. Comprehensive insurance is usually considered to be a good investment since its cheaper than other types of car insurance and covers events that are out of your control as a driver. A good rule of thumb is that if the cost of comprehensive insurance exceeds 10% of your vehicles value, you can consider dropping it.

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What Is The Purpose Of Insurance

Purpose of insurance Its aim is to reduce financial uncertainty and make accidental loss manageable. It does this substituting payment of a small, known feean insurance premiumto a professional insurer in exchange for the assumption of the risk a large loss, and a promise to pay in the event of such a loss.

Uninsured Motor Vehicle Coverage

5 Types of Car Insurance : Get Average Rates

If you’re injured in an accident caused by someone who doesn’t have enough liability insurance or any at all, uninsured & underinsured motorist coverage helps pay for medical expenses, pain and suffering, and lost wages from the owner or driver of an uninsured or underinsured motor vehicle.

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Uninsured And Underinsured Motorist Protection

Although nearly every state requires drivers to carry liability coverage, many people drive without it. According to the Insurance Research Council, an estimated one in eight drivers in the United States was uninsured in 2019.

Uninsured and underinsured motorist coverage helps pay for accident-related expenses. This coverage kicks in if you get hit by an uninsured driver or a driver whose policy limits are too low to cover your bills.

Some states require drivers to carry UM/UIM coverage, while others dont.

If You Have An Accident

Report accidents immediately to law enforcement and to your insurance company. You can order a free brochure from CDI called “So You’ve Had an Accident, What’s Next?” This brochure explains what to do when you have an accident.

Your insurance company may send a person called an adjuster. The adjuster investigates and evaluates your damage and losses. If there is damage to your car, they may refer you to a body shop, or you may choose your own.

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Liability Coverage And California Law

Liability coverage helps pay for injuries or damage to others when you are responsible. If you own and drive a vehicle, you must follow the financial responsibility laws in the state Vehicle Code. The most common way to do this is to buy auto liability coverage.

Liability coverage does not pay for injuries to you or the people in your family. You can buy medical payments coverage for you and your family.

Car Insurance Medical Coverage

Understanding 5 Types of Car Insurance Coverage

Left out of the above discussion of damages and expenses was the topic of medical injuries. What happens if you are not at fault in an accident and you or your passengers suffer broken bones or other kinds of medical problems that require the attention of professionals?

In an ideal situation, the at-fault drivers liability insurance would pay for injuries to your passengers and you. But many states in the U.S. are no-fault jurisdictions, meaning they can require you to carry medical coverage. If you live in a no-fault state, you might already be familiar with the mandatory medical policies. Theyre called PIPs, which stands for personal injury protection policies.

Another name for PIP policies is no-fault coverage. The name references that fact that whether you or the other driver was at fault, the policy will pay out just the same. Your PIP will pay for your injuries in an accident. It will also pay for any injuries suffered by your passengers.

  • Medical PIPs Might be Required in Your State
  • Check your state laws and find out whether medical or PIP coverage is required. If youre new to the area, you might need to upgrade your policy to included no-fault insurance. Ask your insurance agent about how to upgrade and whether you need to.

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What If The Other Drivers Insurance Company Refuses To Pay My Claim

If you believe the other driver was at fault, but his or her insurance company wont pay your claim, file a claim with your own insurance company. You must have collision coverage to do this. Your insurance company will probably try to collect from the other drivers company.

Be aware that if you file a claim with your own company, youll have to pay a deductible.

Learn more: Were you in an accident caused by the other driver?

If You Have A Car Loan:

If you have a loan, you usually need to insure your car. If you do not buy insurance, the loan company may buy it and charge you. It usually costs less if you get your own Collision and Comprehensive coverage.

Auto insurance does not pay off your loan if your car is damaged and its market value is less than what you owe. Auto dealers and lenders may offer Guaranteed Auto Protection insurance for this purpose.

Liability Coverage is for accidents that are your fault.

  • Bodily injury liability pays for bodily injury you cause someone else.
  • Property damage liability pays for property damage you cause someone else.

California law requires you to have this coverage. See pages 67.

Uninsured/Underinsured Motorist Coverage is for accidents when the other driver is at fault and does not have insurance or does not have enough insurance.

  • Bodily injury coverage pays medical expenses for you and passengers.
  • Property damage coverage pays the cost of repairs to your car not covered by collision coverage up to $3,500. You may not need this if you have collision coverage.

You must be offered this coverage, but you can choose not to buy it.

Medical Payments Coverage pays limited medical expenses for people injured in the car you are driving when you have an accident, whether or not you are at fault.

You may be offered this coverage

Physical Damage Coverage pays the cost of repairs or replacement of your car, minus your deductible.

This coverage is required by lenders or leasing companies.

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Different Types Of Auto Insurance

Choosing the right kind of auto insurance can be a daunting task. Most states require some amount of coverage and you will certainly want insurance, given the high cost of car repairs and medical expenses – but how do you choose the policy that is right for you? Before making a decision, it is important that you first understand all of the options available.

1. Liability Insurance

Liability insurance provides you with coverage when you are at fault in an accident. It covers property damage as well as any medical costs incurred by other people involved in the accident. A minimum level of liability insurance is required by most states, but it is often a good idea to choose a policy that goes beyond the minimum requirement. You are responsible for any amount not covered by your liability insurance, and costs can add up quickly.

2. Collision Insurance

While liability insurance will cover costs to repair other cars involved in an accident, collision insurance provides coverage for repairs to your own car. If your car is totaled in an accident, collision insurance will cover the cost to replace your car. The payout will be an approximation of the value of your car before the accident. If you have an older car and it is already in poor shape, you may find that collision insurance is not worth the expense.

3. Comprehensive Insurance

4. Uninsured Motorist Protection Insurance

5. Personal Injury Protection

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Auto Medical Payments Or Med

5 Types Of Auto Insurance

Most people think about coverage for vehicle damage when purchasing auto insurance. But your health and well-being is far more important than the damages to your vehicle!

Auto medical payments, or Med-Pay, will cover your medical expenses, including your passengers and other household members involved in the crash.

Med-Pay will also pay for:

  • Injuries that you sustain as a pedestrian, or if youre riding a bicycle and you get hit by a vehicle.
  • Dental bills that came as a result of a vehicle accident.
  • Funeral expenses.

Med-Pay insurance will also cover insurance deductibles and copays of other insurance policies, including PIP.

If your health insurance provides coverage against car accidents, there is no reason why you should purchase additional coverage like Med-Pay. Look into your medical policy before deciding if you should add Auto Medical Payments to your auto policy.

Recommended Reading: Pros And Cons Of Having Two Health Insurance

Working With An Agent Or A Broker

In California, you can buy insurance from an agent, a broker, or an insurance company. You can get insurance quotes online, over the telephone, or by mail.

  • All agents and brokers must be licensed by the state to sell insurance.
  • When an agent or broker sells a policy, they get a commission from the insurance company.
  • Brokers charge an extra fee, called a broker’s fee. Ask what the fee is before you sign anything. Brokers’ fees are not set by law, so you can discuss the fee and ask for a lower fee.
  • Make sure to keep the receipts for your premium payments, especially if you are paying in cash.

When You Get Your New Policy Review It

Make sure the information is correct and the coverage is what you bought. Contact the company right away if you find an error. Send changes to your agent, broker, and/or insurance company in writing and keep a copy. Do not be afraid to contact the insurance company directly to make sure that your agent or broker has requested the coverage you wanted. Use “certified mail/return receipt requested” to make sure that your letter was received.

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Additional Kinds Of Coverage

  • You can buy insurance for extra equipment, such as stereos, CD players, custom wheels, navigation systems, and cell phones that are permanently installed.
  • You can buy insurance for towing and road service.
  • You can buy rental reimbursement insurance for renting a car when your car is being repaired after a covered accident.

How Much Car Insurance Do I Need

5 factors that affect what you pay for auto insurance

The right amount of auto insurance coverage comes down to your needs, budget, and state requirements. Some things to keep in mind when choosing your coverage are:

  • Which coverages and limits does my state require for all drivers?
  • Does my lienholder have coverage requirements?
  • Do I need to protect any other assets, such as my home?
  • How much can I afford to pay out of pocket at any given time?
  • What is my vehicle worth now?

We recommend checking your state insurance minimums and reviewing all coverage options to make sure you have the right coverage. Our Coverage Calculator can help you find the right amount of coverage and the right deductible to fit your budget.

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Will The Insurance Company Pay For A Rental Car

If your accident was caused by another driver, the other drivers insurance company will pay for you to rent a car. You can keep the rental car for the time the company believes is reasonable for your car to be repaired. The company will base the amount of time on the estimated number of hours of labor. Be sure to let the adjuster know about any delays in getting your car fixed. The company might extend the rental if there are delays because the repair shop had to order parts or found more damage.

If the company totals your car, it will probably stop paying for the rental a few days after telling you.

Your insurance company will pay for a rental car if:

  • you have uninsured/underinsured motorist coverage and the driver who caused the accident didnt have insurance or enough insurance.
  • you have uninsured/underinsured motorist coverage and the accident was a hit-and-run.
  • you have rental reimbursement coverage and were in an accident.
  • you have comprehensive coverage and your car is stolen.

Your insurance company will pay for a rental car only for the time it believes is reasonable to repair or replace your car. It will pay a set amount each day and only up to your policys rental coverage dollar limits.

Save Money On Your Policy:

  • Ask about multi-car discounts, for insuring several cars.
  • Ask about mature driver and good driver discounts.
  • Ask about discounts for airbags, anti-theft devices, or other features.
  • Ask about payment installment plans and if there are service fees.
  • Ask about higher deductibles for comprehensive and collision coverage. This will lower your premium.
  • Think about dropping comprehensive and/or collision coverage on an older car.
  • If you do not have collision coverage, ask about uninsured motorist property damage coverage.

Worksheet: How Much Insurance Do I Need?

These are some of the common limits you can buy. Check off what you want.

Liability CoverageBodily Injury Limits

Limit for each Person/Limit for each Accident

  • $15,000/$30,000
  • $25,000/$50,000

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Insurance Facts That Are Good To Know

Keep up with insurance trends.

Every once in awhile, check-in with a few of the major car insurance websites and see what the prevailing rates are for your kind of car and drivers like you. If rates have gone down, contact your agent and see if you qualify for any discounts based on age, driving record, membership in certain clubs, etc. Youd be surprised what type of car insurance should I get just by asking. Many insurers dont advertise special discounts, so you might never find out unless you inquire.

Many factors affect the rate you pay for insurance.

The first types of auto insurance policies was written in 1897, but things have changed a lot since then. For example, no matter what kind of car insurance you have, your credit rating can affect your rate. Keeping an eye on your can mean a lower car insurance bill. Other factors that can affect your rates include your age, your driving history, the make and model of the car you drive, and the zip code in which you reside.

Try to pay your premium annually.

Drivers who pay month-to-month for car insurance are charged a bit more because they are seen as higher-risk people than those who pay annually. If you want to save a bit on car insurance, pay your premium once per year.


The Six Types Of Car Insurance

One Of The 5 Types Of Vehicle Insurance Is
  • Liability: Pays for other peoples expenses after an accident. Required in nearly every state.
  • Collision: Pays to repair or replace the policyholders car after any accident, regardless of fault. Only required for leased or financed cars.
  • Comprehensive: Covers damage to the policyholders vehicle caused by something other than an accident. Only required for leased or financed cars.
  • Personal Injury Protection: Pays for the policyholders direct and indirect medical expenses after an accident. Required in 12 states.
  • Uninsured/Underinsured Motorist: Covers vehicle damage and medical expenses after an accident with an uninsured/underinsured driver. Required in 20 states.
  • Medical Payments: Pays for the policyholders direct medical expenses after an accident. Required in two states.

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