Types of Auto Insurance Coverage

Regardless of where you live, certain types of auto insurance are needed if you want to drive on the road.

The following is a list of some required and optional car insurance coverage :

Personal Injury Protection -- pays for expenses resulting from injury or death to you or your passengers, regardless of who is at fault. This insurance coverage will also pay a death benefit to the deceased's survivors.

Bodily Injury Liability -- pays for medical or death expenses resulting from an accident in which you are at fault.

Property Damage Liability -- pays for repair or replacement and legal expenses for property damaged in an accident in which you are at fault.

Collision -- optional in most states, this pays for damage caused to your car in a collision or rollover, minus a deductible set by the insured. Higher deductibles typically result in lower premiums.

Uninsured/Underinsured Motorist Protection -- pays personal injury or death benefits if you are in an accident caused by an uninsured, underinsured, or hit-and-run driver.

Comprehensive -- pays for damage caused by theft, vandalism, fire, and most natural disasters. Though optional in most states, banks will typically require you to purchase this car insurance if the vehicle you are buying is being used as collateral for a loan. Equipping your vehicle with certain anti-theft devices can reduce your auto insurance premium.

Understanding the different types of car insurance coverage will enable you to make the right decisions when getting a package that suits your lifestyle as well as fits comfortably into your budget.

I will elaborate a little more on the different types of auto insurance coverage in a later post.