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What Does Car Insurance Cover? – Bankrate.com

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We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free – so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover.
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you.
While we adhere to strict , this post may contain references to products from our partners. Here’s an explanation for . This content is powered by HomeInsurance.com (NPN: 8781838). For more information, please see our
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next.
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Our insurance team is composed of agents, data analysts, and customers like you. They focus on the points consumers care about most — price, customer service, policy features and savings opportunities — so you can feel confident about which provider is right for you.
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This content is powered by HomeInsurance.com, a licensed insurance producer (NPN: 8781838) and a corporate affiliate of Bankrate.com. HomeInsurance.com LLC services are only available in states were it is licensed and insurance coverage through HomeInsurance.com may not be available in all states. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.
What does car insurance cover? It depends on the coverage you buy. Almost all states have minimum insurance requirements, though they vary by state. No matter the coverages you choose, it will always include minimum liability. Some other coverages you can choose are PIP, gap insurance, comprehensive and uninsured motorist. Understanding the coverages can help you decide what to buy to meet your needs.
When you buy an auto insurance policy, you select different coverage options to protect yourself and your car. Based on the coverage you select, your insurance company will then pay up to a certain limit per coverage type. Coverage protects you if you are injured, the other person if they are injured or if you cause property damage to your own car or someone else’s.
Some coverage types have a deductible, which is the amount you are responsible to pay, before the insurance company pays its portion. You can increase or decrease your deductible amount depending on your needs and financial situation. The more coverage types you buy and the higher your coverage limits, the less likely you will have to pay for damages out of pocket after an accident, except for the deductible. But, with higher limits and more coverage comes a higher price tag for insurance.
Minimum liability coverage is the least amount of coverage you can buy as required by your state. Each state has its own minimum requirements, but almost all of them require a certain amount of liability insurance. Depending on the state, you can decline certain coverages, even when offered. For example, in Maryland, insurance agents are required to offer PIP coverage, but you can decline it.
Bodily injury liability pays for the other driver and their passengers’ injuries if you cause an accident. This coverage pays for their medical bills, lost wages and pain and suffering because of the accident. Most states require a minimum amount of bodily injury liability. There is no deductible to use this coverage.
If you cause an accident and damage someone’s property, property damage liability pays for it. Property damage is most often caused to someone’s vehicle, but could also be a fence, mailbox, utility pole, guard rail or building. Just like bodily injury liability, this coverage is usually required and does not have a deductible.
Though not required in all states, uninsured and underinsured motorist coverage protects you if someone hits you and does not have any insurance or enough coverage to pay for your injuries and property damage. Most often, this coverage is used when you are a victim of a hit-and-run, which is when another driver is at fault and leaves the scene without providing insurance information. If you want protection against uninsured drivers, consider this coverage, even when it is not required.
PIP, short for personal injury protection, is a coverage required by some states, though some allow you to waive coverage. PIP insurance pays if you or your passengers are injured in an accident, no matter who is at fault. It also covers you as a passenger in someone else’s vehicle. It you include PIP coverage on your car insurance, it covers (up to the maximum limit selected):
Childcare and household services are only covered if needed while you are recovering from your injuries. The amount you can buy varies by state and there is no deductible to use this coverage.
Medical payments coverage pays for medical expenses you incur if you are injured in an accident, regardless of fault. If you select this coverage, it follows you when you are walking, riding a bike, on public transportation, driving your own car or someone else’s or if you are a passenger. Like PIP, there is no deductible to pay for coverage.
With minimum liability coverage, you miss out on physical damage coverage for your own car. If you want the insurance company to pay for repairs to your car in a covered claim, consider full coverage car insurance. The national average cost of full coverage car insurance is $1,674 per year. However, your rate may be different based on your driving history, location and coverages and deductible selected.
Collision insurance pays for the damage to your car caused by hitting another vehicle, object or piece of property, regardless of fault. A deductible will apply to this coverage, and is based on the deductible you select for the policy.
Comprehensive insurance, also called other-than-collision coverage, pays for the damage to your car not covered by collision. This includes:
Like collision, the deductible you choose for comprehensive coverage applies when you file a comprehensive claim.
Most insurance companies offer add-on coverages you can get besides full coverage. While options vary by state, other types of coverage could include:
The people listed as insured drivers on your auto insurance policy are covered to drive your car. If you give someone not listed or in your household permission to drive your car, they are also covered. Keep in mind, if they get into an accident, it falls under your insurance policy.
Your auto insurance policy will detail what is and is not covered in your policy. There are a few things that are not covered by car insurance:
The best car insurance company is one that meets your needs and coverage requirements. You may have to shop around to find the right insurance company for you.
How much car insurance you need is up to you after you meet the state’s requirements. Consider whether you need minimum or full coverage and what limits and deductibles are best. Once you determine how much coverage you need, get quotes from multiple companies to get the best price.
Bankrate.com is an independent, advertising-supported publisher and comparison service. Bankrate is compensated in exchange for featured placement of sponsored products and services, or your clicking on links posted on this website. This compensation may impact how, where and in what order products appear. Bankrate.com does not include all companies or all available products.
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