Car insurance coverage explained
If you think that paying for the new car at the dealer's is the end of your expenses, you're very wrong. In fact, this is only the start because there are many additional costs involved such as maintenance, repairs but most importantly car insurance. Having enough car insurance coverage is important for keeping your car protecting against numerous perils you may encounter on the road. And it's really important to know what the most common types of coverage pay for when considering a particular car insurance policy. Because in the end you will pay for all the coverage your policy features.
Third party liability coverage
This is the basic coverage type, which is required by most state laws. It is comprised of bodily injury and property damage, and pays for injuries to third parties or damage to third party property in case you're at fault in the accident. This coverage type is also used as a proof of financial ability of the driver to face personal liability in case of the accident. The minimum requirements for third party liability vary from state to state, so it's recommended to check with your state insurance department or search the web for a list of state car insurance limits.
Collision and comprehensive coverage are two separate forms of car insurance coverage, however they are often bundled into a single product because they provide accompanying forms of vehicle protection. Collision pays for the damage your vehicle sustains due to a collision with other cars, moving objects or elements of infrastructure, even if you're at fault during the accident. Comprehensive coverage pays for the damage arising in various situations such as fire, acts of vandalism, natural disaster, theft, storms and many others. These types of coverage are optional, however if you're buying a car using a loan you may be obliged contractually by the lending institutions to include collision and comprehensive coverage into your car insurance policy.
Uninsured/underinsured motorist coverage
Regardless of the fact that car insurance is required by state laws there are a lot of drivers who roam the roads without sufficient or any insurance coverage on their vehicles. Ending up in an accident with such a driver, him being at fault of the accident means that your costs won't be paid for because he simply doesn't have third party liability coverage to reimburse your damage or injuries. In such a case having uninsured/underinsured motorist coverage really helps, since it acts like the other party's insurance company is paying for your repair and medical costs.