Underinsured and Uninsured Motorist Insurance
This is probably the most important type of car insurance, and it's required by most state auto insurance laws. Liability car insurance protects you against the cost of damage and injury that you cause to another in an automobile accident.
It's actually made up of two different policies, bodily injury liability, and property damage liability. As you might guess, bodily injury insurance protects you from the cost of personal injury to others, and property damage insurance protects you from the cost of damage you cause to any physical property.
You've probably seen automobile policies described by three numbers (like 50/100/25). These numbers refer to auto liability insurance.
They're usually called the split limits of liability insurance. Under our example auto liability insurance policy, you'd be covered for up to:
•$50,000 worth of bodily injury caused to another person
•$100,000 for bodily injuries caused to everyone
•$25,000 worth of property damage.Even though it may be tempting to save a few bucks by going with the minimum liability required in your state, it is always worth investing in a little extra protection.
This policy provides for the immediate treatment of injuries caused by a car accident. You, your family members and other passengers in your vehicle are covered, regardless of who is at fault for the accident.
Depending on the specifics of the policy, medical payments coverage may also compensate for lost wages or services of a person injured in the car accident.
PIP, or personal injury protection, is similar to medical payments coverage, but usually provides broader coverage. Many PIP policies provide compensation for lost wages, funeral expenses, and pain and suffering.
Both of these types of insurance protect you against injury caused in an automobile accident where the at-fault driver's liability car insurance coverage is inadequate. Though they're often lumped together, they're really two distinct policies.
Uninsured motorist insurance is needed when the other driver has no liability coverage.
Underinsured motorist coverage pays for the cost of your injuries that exceed the other driver's coverage maximum.
Most states require neither type of coverage, but some require one or the other, and a few even require both. They're more often required in no fault states.
Collision insurance coverage pays for damage caused to your vehicle in an automobile accident, when you are "at fault". A standard collision automobile insurance policy will pay for any repairs up to the fair market value of your car.
Collision coverage usually also comes with an insurance deductible. It's the amount of money you pay toward repairs before your collision insurance kicks in. The higher the deductible you're willing to pay, the less the collision policy will cost.Collision insurance coverage is not required by law in any state. However, if you're driving a car purchased from a dealership or financed through a lender, you may be required by the dealership or lender to carry collision insurance.
Comprehensive is very similar to collision insurance, the main difference being that comprehensive covers damage caused to your vehicle caused by any unknown party or "act of God".Vandalism, flood, hurricane, theft, and fire are all events usually covered by comprehensive automobile insurance. (But make sure to read your comprehensive insurance policy for exact coverage details.)
Like collision automobile insurance, comprehensive coverage will pay up to the fair market value of your car (less your insurance deductible.) And although it's not legally required by any state, you will probably need it if your car is financed.
Automobile insurance endorsement is just a fancy term for any of those policy extras like towing insurance, auto glass insurance, daily rental insurance, and emergency roadside insurance.
These policies are never required by any state, but many drivers value the security and convenience they provide.
Here's what you get for your money:
• auto towing insurance pays for (you guessed it) towing your car anytime you need it
• auto glass insurance gives you a lower deductible (or no deductible) when it comes to repairing any broken window on your car.
• daily rental insurance covers the cost of a rental car while your car is being repaired because of a covered event. (So you'll usually need both comprehensive and collision insurance to qualify.)
• emergency roadside assistance covers repairs done on the spot. Changing a flat roadside may be covered, but you'll have to pay for any repairs at the garage. This policy is often combined with auto towing coverage, and called roadside emergency towing insurance.
Source: Auto Insurance in Depth