If you are buying insurance for your new car, you will be stuck in a myriad of insurance policies available to you.
This happens with almost everyone. Insurance policies are complex. They have hard to pronounce names and difficult to understand. So, in this blog, we have decided to explain everything that you would like to know about motorist insurance. So that when you go hunting for car insurance, you are better aware of the type of insurance policies available in the market and which one to choose for your benefit.
Let’s get started.
Note: Insurance policies can differ from state to state. So, before buying one, make sure to read the insurance laws of that state. If they have a specific mandatory insurance cover, you will need to get that one then.
- Third-party Insurance
Third-party insurance is not for you but for people who can get harmed because of you. Yes, I am not joking.
Third-party insurance covers everyone and everything except the driver and their vehicle. If you hit someone by accident, the third party insurance will cover their vehicle expenses, their medical bills, and even the medical bills of passengers sitting with you. But it won’t cover any medical bills associated with you or the repair expenses of your vehicle.
It is mandatory in most states to have third party insurance available. It is the minimum insurance level you can get as a cover to drive on the highways.
The third-party insurance can be anywhere from $500 to $1,000 annually.
But do note that the cover by third party insurance is quite necessary. If you have bought an expensive car, then you should opt for fully comprehensive insurance – we will discuss this in detail below.
- Third-Party Fire and Theft Insurance
Next, we have third party fire and theft insurance cover. This type of insurance covers third party injuries, just like the protection layer offered in the first insurance type.
Moreover, it also covers your car against fire and theft. If your car catches fire, the insurance company will pay for all the repairs.
Similarly, if your car gets stolen, the insurance company will have to find it and bring it back or get you a new car. Third-party, fire, and theft insurance is far better than the basic layer of protection because it covers theft and fire – a common occurrence in cars.
Third-party, fire, and theft insurance can range from $800 to $1,500 annually.
- Fully Comprehensive
Next, we have fully comprehensive car insurance available. It is also called complete car insurance. This means it will cover third party, fire, theft, medical, car repairs.
Since fully comprehensive insurance provides an extensive level of protection, it also comes at a high cost. On average, Americans paid $1502 in 2019 for fully comprehensive car insurance.
Before you go buying fully comprehensive car insurance, make sure that you find out what fine print of terms and conditions say.
In most states, fully comprehensive car insurance will cover the driver, even if he is driving another vehicle. But in some states, the insurance policy won’t cover the driver if he/she is driving another vehicle. So, make sure to check that before settling for this car insurance.
- Collision Coverage Insurance
There are some insurance options available for people who don’t want to go for a fully comprehensive car insurance cover. The first one is the collision coverage car insurance cover. It is different from comprehensive car insurance because it covers:
- Collision with another vehicle
- Collision with a fence or with another object
- Car roll-over accidents (this only applies to the car that is registered for insurance)
With collision coverage, you will get paid in cash or get the repairs done by the insurance company for any collisions or roll-overs. The cash would be paid after assessing the current market value of the car.
Collision coverage is optional and is only required if you are renting your car to a rent-a-car company. It may also be mandatory when you buy and sell cars in an auction market.
- Medical Payments Coverage
In case of an accident, medical payments coverage can come in handy. The medical payment coverage is also called as med pay.
It is not a necessary cover and neither required by the law. However, the medical payment coverage helps cover you and your passengers in case of an accident with a third party or an object.
Med pay is an essential need for drivers who drive on the highways who don’t have a comprehensive insurance cover. With med pay, they can easily bear the costs of surgeries, X-rays, and hospital checkup bills.
Although med pay is optional, some states have made it mandatory with comprehensive insurance cover.
- Personal Injury Protection (PIP)
Personal injury protection (PIP) is also called “no-fault insurance.” What it means is that the policyholder is reimbursed whether he/she is at fault or not.
PIP is considered as the first party insurance cover as it covers all medical expenses of the policyholder and his/her passengers. It will also work even if the policyholder or his passengers don’t have health insurance from the state.
PIP is not mandatory by states since it only covers the policyholder and his passengers. However, car owners can still get PIP to keep themselves secure in cases where the other person doesn’t have third-party insurance. Apart from medical injuries, PIP will also cover lost income during a vehicle accident.
We hope you are now aware of the different types of insurance policies that are available as a safety cover for you and your car.
Although comprehensive and collision insurance policies cover almost all the aspects while selecting an insurance policy, you should consult with an expert who can provide you a piece of solid advice on which policy to buy.
Evie harrison is a blogger by choice. She loves to discover the world around her. She likes to share her discoveries, experiences and express herself through her blogs. Find her on Twitter:@iamevieharrison