The Components of Auto Insurance

Car insurance is an important part of vehicle ownership. It is required by state law that you have insurance to be able to drive your vehicle. You will not be able to register or drive without it. It can be expensive to pay for insurance every month and there are various types of insurance contained within your insurance policy. This can make it complex for you to decide which coverage types and amounts you want for your vehicle. Below, we will discuss the various types of insurance coverage to help you make an informed decision.

• Liability Coverage: Liability coverage is typically required by law in most states. If your state requires auto insurance, as New York State does, you will need to have liability insurance at a minimum. It has two components: bodily injury liability and property damage liability. Bodily injury liability covers the medical expenses, legal fees, and lost wages of someone who was injured in an accident that you were at fault for. Property damage liability helps cover the cost of damage to the property of others involved in an accident you are responsible for. It can cover damage to vehicles, fences, or building fronts.

• Collision Coverage: Collision insurance helps to cover the cost of repair for your vehicle whether you are responsible for the accident or not. This coverage is especially important for newer or more valuable vehicles. This coverage comes with a deductible that you must pay before insurance covers repair costs.

• Comprehensive Coverage: Comprehensive coverage protects your vehicle against non-collision-related incidents, such as theft, vandalism, fire, or natural disasters. It covers the cost of repair or replacement of your vehicle, up to its cash value. This coverage comes with deductibles too, much like collision coverage.

• Personal Injury Protection (PIP): Personal Injury Protection, also known as no-fault insurance, is required in some states. It helps to cover the medical expenses and lost wages for you and your passengers who were involved in an accident, regardless of who is at fault. This makes it easier to have your medical and living expenses paid for while you and your passengers must wait for it to be determined who is at fault for the accident.

• Uninsured/Underinsured Motorist Coverage: Unfortunately, not all drivers carry enough insurance to cover the costs of an accident completely. Uninsured/underinsured motorist coverage helps cover repair costs for your vehicle, medical expenses, and lost wages for you and your passengers when the other driver does not have sufficient coverage or no coverage at all.

• Gap Insurance: Gap insurance is optional but can be beneficial if you have a leased or financed vehicle. It covers the difference between the actual cash value of your vehicle and the amount you owe on your loan or lease in the event of a total loss. This coverage ensures that you are not left with a significant financial burden if your vehicle is totaled from an accident, and the insurance payout falls short of what you owe.