The purpose of this article is to explain the main types of auto insurance coverage.  Here we break each of them down to, hopefully, make them a little easier to digest and understand.  To give a quick overview, there are six main types of coverage.  Whether a type of coverage is required, and the minimum amount of coverage needed, varies by state (here is a list of coverages required by state).

The two coverages which are mandated, or required by almost every state, are Bodily Injury Liability and Property Damage Liability.   Liability just means responsibility, and so these coverages handle the costs others may incur when the accident is your fault. Sometimes required are Medical Payments or Personal Injury Protection and Uninsured or Underinsured Motorist Coverage.  The two optional coverages are Collision insurance and Comprehensive coverage.   California only requires Bodily Injury Liability and Property Damage Liability, while Pennsylvania requires these as well as Medical Payments/Personal Injury Protection Coverage.

Bodily Injury Liability
One of the two types of coverage that is usually required, this covers costs related to death or injury caused by you or another driver while driving your car.  Sometimes you might see a per person limit and per accident limit on your coverage.  This just breaks out the limit of costs your insurance policy will cover.

Property Damage Liability
This is the other type of coverage almost always required.  This coverage reimburses damage that you or another driver cause to property or another vehicle while driving your car. So for example, if you hit another car or someone’s personal property, this is the coverage that will reimburse those expenses.

Medical Payments or Personal Injury Protection
This is required in many states (like Pennsylvania). Medical Payments or Personal Injury Protection covers medical costs for you or your passengers. It may also cover lost wages and other related expenses.  If you are in an accident, and need to spend some time in the hospital, this coverage will handle those costs.

Uninsured or Underinsured Motorist Coverage
This is a safeguard in the event of a hit and run, an accident with an uninsured driver, or an accident with a driver who is underinsured.  Being underinsured just means that their coverage is not sufficient to cover the necessary expenses.  The purpose of this coverage is to protect yourself against a situation where you are not at fault, yet you have no recourse or way to pay your costs.

Collision Insurance
This covers damage done to your car as a result of crashing into another car or object when you’re at fault.  Collision insurance is optional, and while it doesn’t cover mechanical problems or normal wear and tear, it does cover many single vehicle accidents where you may not have other recourse.

Comprehensive Coverage
This handles costs related to damage or loss caused by something other than an accident.  This coverage is what pays you back if your car is stolen, or if a tree falls on your car unexpectedly.  Comprehensive Coverage is optional but can be nice to have for those unexpected occurrences in life.

Sigo is here to help make the auto insurance purchasing process easier.  Please let us know if you have any questions or concerns!