Car insurance coverage types: optional and mandatory
It's such a headache when you have to renew your policy or pay the premiums to have your car insured. If you had the “luck” of getting an expensive policy in the first place then this process is certainly quite unpleasant for you. Paying money for what you feel is over-priced can make you think that you're wasting your money on something you don't really need. And this in turn results in some drivers dropping their policies altogether, driving without insurance and ending up paying all the costs out of own pocket in case of an accident. If you think that you are special and can't have an accident because you're good driver we have bad news for you – there are millions of drivers out there just like you who think they can handle it but still accidents take place every few minutes on US roads. And you might end up in one of those regardless of how good you are behind the wheel.
So is there any way to have reasonable rates while still having your car insured properly. Of course, there is. Quote often drivers don't even know what is included into their policies, believing that all policies are the same and carry identical benefits to all drivers. That is not true. Every policy is a bundle of several coverage types, designed to protect the vehicle in specific situations. The amount of each coverage type is also different. And the policyholder is free to tailor coverage according to his or her needs. Car insurance companies offer preset policies in order to make it easier for them to offer their services. But it doesn't mean that you can't adjust it the way you want. So let's take a look at common coverage types and see which are necessary and which aren't.
Third party liability insurance
Third party liability comprises bodily injury and property damage liability and is the only mandatory type of coverage. As you may guess from the name this type of coverage pays for the injuries or damage you have caused to third parties while being behind the wheel. The minimum amount of third party liability coverage is strictly regulated in every state and going below specified limits will result in penalties.
Comprehensive and collision
Collision and comprehensive coverage are often bundled together however these are two separate coverage types serving different purposes. Collision coverage pays for any damage resulting from a collision of the insured vehicle with any other object regardless of who is at fault. Comprehensive coverage pays for the damage resulting from all other situations outside direct collision such as storms, fire, theft, vandalism, explosions, earthquakes and many others. Both types of coverage are optional, however if you're buying a car through a loan you may be required to purchase them by the contract.
Uninsured and underinsured motorist
This type of coverage is often overlooked due to its optional status but it is certainly useful these days as there are so many drivers out there without proper car insurance. Uninsured/underinsured motorist coverage acts as a third party policy in case you end up in an accident with a driver who has no insurance or his coverage is too small to pay for the damage inflicted.