Jessica Sautter is a Content Writer for CarInsuranceCompanies.com with a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager

UPDATED: Sep 14, 2020

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Key takeaways...

  • Comprehensive coverage provides insurance for damage to your vehicle
  • Collision car insurance is coverage when you are involved in a car accident while driving
  • GAP insurance provides coverage for the GAP between a vehicle’s book value and what you owe

A car insurance policy provides financial protection in the event of an accident causing damaging to your vehicle and the person injured in an accident.

Liability insurance coverage is the most important, but its also the only type of coverage required by law and just having liability coverage will not protect your vehicle.

All the different types of car insurance each have their benefits however many drivers operate vehicles with much less coverage than they think they have.

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Table of Contents

Liability Insurance

There are two things that liability insurance covers. Bodily injury and damage to property owned by others.

Essentially, liability insurance provides financial protection for damages caused to other people by an accident which you were at fault.

There is no question that liability insurance is the most critical type of coverage and almost all states make liability insurance coverage mandatory for drivers.

The confusion can lie with how much liability insurance you have. State minimum car insurance requirements are meager and provide only a small blanket of protection.

In fact, if you suffer any common or severe car accident, you will most likely find out that you are personally liable for bills which exceed the small limits of coverage states require.

For this reason, it’s critical you seek higher limits of liability insurance than just state minimum requirements. Additional coverage is easy to get and very affordable.

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Comprehensive and Collision Coverage

With liability insurance, you have coverage for damage to another person’s car but what about your own?

This is why you need to learn about car insurance as the first thing you will want to be fixed after a car accident is your vehicle.

There are two types of personal property coverage:

Comprehensive coverage provides insurance for damage to your vehicle and collision car insurance is coverage when you are involved in a car accident while driving.

GAP Car Insurance

GAP car insurance is critical to anyone buying or leasing a new model car. As soon as you purchase a new vehicle, the book value can often drop up to 30 percent.

Comprehensive car insurance only provides coverage up to the book value of a vehicle so you may be upside down on your financial obligation for the car.

GAP insurance provides coverage for the GAP between a vehicle’s book value and what you owe.

Uninsured / Underinsured Motorist Insurance

This type of coverage provides protection when an accident occurs, and the other driver has no insurance or coverage with limits not high enough to cover all costs.

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Personal Injury Protection

PIP insurance is essential to have because it provides coverage for such things as health expenses, lost wages and funeral costs for people suffering personal injury from a car accident.

Rental Car Coverage

When your car is damaged, you will need an alternate form of transportation, and rental car coverage provides coverage for renting a car.

Imagine having your car damaged with a 2-4 week repair time and having to pay for a rental car yourself. The minor cost of adding rental car coverage to any car insurance policy is well worth it.

The only way to know what coverage you have is to read your car insurance policy in full or speak with your car insurance company direct.

You should review your car insurance coverage at least annually, so it may be time to check your policy and see what coverage you have.

Car insurance rates often change so while doing an annual review always make sure to get car insurance quotes from a few companies to make sure you are still paying reasonable premiums.

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References:

  1. https://www.statefarm.com/insurance/auto/coverage-options/comprehensive-coverage
  2. https://www.allstate.com/tools-and-resources/car-insurance/gap-insurance-coverage.aspx
  3. https://www.nationwide.com/personal-injury-protection.jsp