Types of Car Insurance Coverage Explained

Types of Car Insurance Coverage

If you drive a vehicle, you are legally required to have insurance. Through your insurance policy, you are protected from excessive financial liability both in the case that you cause or suffer from an accident. When looking into the insurance market however, many individuals are overwhelmed by the numerous types of coverage provided, often unsure of how much coverage they really need.

In the article below, we will explain the differences between the 5 major categories of car insurance in addition to a few other add-ons you may need in extenuating circumstances.

Liability Insurance

Liability insurance is made to help cover the costs of an accident you created— hence the title liability. As we are all prone to making a mistake at some point, states require all drivers to meet a minimum amount of liability coverage, also known as state minimum coverage plans.

These coverage amounts are:

  • $25,000 in bodily injury liability insurance per driver
  • $15,000 in property damage liability

While this minimum amount is usually offered at affordable rates, we recommended that most divers purchase a higher grade of insurance when possible. This is because liability coverage does more than protect against property damage to a vehicle. Rather, this insurance category is well rounded, also offering coverage on car repairs and medical bills resulting from the accident.

Collision Coverage

Collision coverage is a base level insurance type that protects only the vehicle itself. If the vehicle is damaged in a collision, your insurance policy will pay for the damage up to the full policy amount. If your vehicle repairs exceed its market price, then the insurance company will write off the accident as a total loss and compensate you for the market value of your vehicle.

This offers individuals some flexibility with coverage amount for cost-conscious individuals. An older car with a lower market value doesn’t need as much insurance as a new sports vehicle. As such, you can still purchase collision coverage, have the added security, but not get gouged on the added price.

Comprehensive Coverage

There are several types of vehicle damage that can occur to a car even if you don’t experience an accident. Many of these damages are from unavoidable daily events like a hail storm, car theft, or vandalism. To cover damage to your car in these situations, you need comprehensive coverage.

Unfortunately, because of the wise range of hazards this type of insurance covers against, it also it’s the most cost prohibitive.

Personal Injury Protection (PIP)

When you are involved in an accident, your overall expenses quickly add up. PIP insurance, also known as no-fault insurance, aims to help keep these experiences under control. This is accomplished through covering the medical expenses of yourself and your passengers, lost wages, and in some cases, funeral expenses.

Unfortunately, not all states offer this type of insurance coverage. As such, if this type of liability coverage appeals to you, it’s likely you may need to purchase several other types of optional coverage in order to achieve the same end.

Underinsured and Uninsured Motorist Coverage

While we previously mentioned that Arizona implements state minimum coverage for all drivers, not everyone is able to meet this demand. This creates a financial risk for both you and other drivers were you to get into a car accident with a person who lacks adequate insurance.

If you are involved in an accident with a driver who lacks proper insurance, this type of coverage will buffer the financial burden on your end.

Miscellaneous Insurance Coverage

The types of insurance we have already covered thus far are some of the most common policies an individual can purchase. These are policies that reflect some of the most common coverage needs of average drivers without any of the bells and whistles found in other types of supplementary plans.

However, for individuals who need added coverage for one reason or another, a few additional options exist.

  • Full Coverage Insurance
    This type of insurance is most common in situations where you are leasing your vehicle. The objective in full coverage insurance is to protect your lender from losing valuable assets in a crash and protecting you from making unnecessary payments.

    If you were to total a leased car without full coverage insurance, you would also be responsible for the remaining payment balance on the vehicle. This could be catastrophic for your personal finances. As such, many dealers will not lease you a vehicle without this level of insurance coverage.

  • Gap Coverage
    Similar to full coverage insurance, gap coverage helps to bridge the gap in payments when you total a car that is not yet paid off. When purchasing this type of coverage, make sure that the amount you purchase is enough to fully satisfy the outstanding balance on your car so, in case of a total loss, you can still walk away with a fresh start.

Independent Insurance Agents in Arizona

When looking at the various types of insurance coverage on the market, it is sometimes difficult to know exactly what you need. Even more challenging is finding who offers the policy at a price you can afford.

At the Gebhardt Insurance Group, we offer a variety of coverage from a host of major insurance carriers with an experienced staff that can help you determine the coverage you need. We can help everyone from individuals looking for a basic health policy to families, persons with pre-existing conditions, and even those looking to purchase life insurance. If you have any questions, give us a call at 520-836-3244 to get a quote and make an appointment to take the final steps in insuring yourself and your family.