There are several types of coverage in car insurance policies. These can include:
⦁ Bodily injury liability: If you are at fault for an accident, this coverage will cover another driver’s medical expenses.
⦁ Collision: This coverage will cover repairing or replacement of your car if you’re at fault for an accident.
⦁ Comprehensive: This coverage covers you to replace your stolen vehicle or for non-collision losses (i.e., storm damage or vandalism).
⦁ Medical payments: This coverage helps to pay both you and your passenger’s medical expenses due to injuries in an accident.
⦁ Personal Injury Protection (PIP): If you or a passenger dies in a car accident, PIP may cover funeral expenses. PIP can also pay to compensate for lost income if you are required to miss work due to an injury, and it also works the same as the medical payments coverage to help pay medical expenses for you and your passengers.
⦁ Personal property liability: This type of coverage pays to repair or replace the other driver’s automobile if you’re at fault for the accident. It will also cover you if you run into your neighbor’s fence or other types of property you might drive through.
Liability vs. Full coverage:
If you’re looking to save every cent you can on your very cheap car insurance with no deposit policy, an option is to drop full coverage and only keep liability. Is that a smart move? Before making a big decision like this, you need to fully understand what Liability insurance covers and what you will opt out of if you drop full coverage.
Liability insurance provides coverage when you’re responsible for a car accident. It consists of two types of coverage:
⦁ Bodily injury liability
⦁ Property damage liability
Full coverage is comprised of two types of coverage:
⦁ Collision insurance
⦁ Comprehensive insurance
Collision insurance is just what its name suggests: It protects you when you’re behind the wheel and when you cause damage through a collision with another vehicle.
Comprehensive coverage cover theft, damage from falling objects, vandalism, fire, flood, or other types of damage to the vehicle in the event of an accident other than a collision.
Most major car insurance companies provide specialty-line insurance to their policyholders.
⦁ Uninsured or Underinsured Motorist Coverage (UM or UIM): If a driver with no insurance is the fault of an accident, you are still covered. If you don’t have this coverage, you may be forced to file a claim on your collision coverage, raising your rates.
⦁ “GAP” Coverage for Loans: “GAP” stands for Guaranteed Auto Protection. Let’s pretend that you just bought a brand new $40,000 car. After one year, your car depreciated to $30,000. You have an accident, and your car is totaled. You still owe $36,000 on your loan, which is a difference of $6,000 that you will have to pay for. With GAP coverage, the insurance company will pay off the entire loan for you.
⦁ Custom or Specialty Equipment Coverage: This is a good one if you added aftermarket upgrades, modifications, or even a new GPS. If a thief breaks into your car and rips out that brand new GPS system, it will not be covered by your insurance provider unless you have this additional coverage. Without this one, you’re only covered for your vehicle’s stock equipment and features.
Coverage You Could Do Without
There are some things in a policy that you may not need which can save you some extra dough. The two most common items you see people leave out of their insurance to save money are:
⦁ Car rental coverage
⦁ Roadside assistance.
Roadside assistance can be worth it depending on your situation, or you don’t need it at all. You may already have AAA or roadside assistance through your car dealership or warranty policy. Remove from your policy anything you don’t need.
Select Comprehensive Coverage Only if it’s Worth It
Ultimately, if a lower value vehicle were in an accident, the insurance company would likely render the car as totaled. So, if the car’s value is only $1,000 and the collision coverage costs $500 per year, it does not make sense to add it to your insurance.