Auto Insurance 101: Understanding Coverage Types

Posted on: 21 August 2019

When you shop for auto insurance services, there's a lot of coverage terminology that gets thrown around and that can be a little confusing. By having a better understanding of the most common types of auto insurance and what they actually mean, you'll make informed decisions as you put together your ideal policy.

State-Minimum Coverage

Each state sets its own laws regarding how much coverage drivers must carry in order to operate a motor vehicle within the state in which they're registered. State-minimum coverage (also referred to as PLPD coverage in some states) basically consists of personal liability and property damage protection. This coverage is designed to cover expenses related to the injuries or death of another driver and/or passenger in an accident where you are found to be at-fault, as well as any property damage caused by your vehicle. This can include property damage to another vehicle involved in the accident or damage caused to a person's property, such as a fence.

"Full Coverage"

In addition to property damage and personal liability insurance, which drivers in all states are required to carry specific amounts of, some drivers also carry what's known as "full-coverage" auto insurance. Specifically, full-coverage insurance includes not just personal liability and property damage protection, but comprehensive and collision coverage as well. Comprehensive coverage protects against damage to your own vehicle caused by things like vandalism, hail, and other causes aside from being in an accident. Collision coverage protects against damage to your vehicle that occurs in an accident.

If your vehicle is financed (whether you're leasing or making monthly finance payments), your lender probably requires you to carry full-coverage insurance.

Rental Reimbursement Coverage

If your vehicle is ever in the shop for a covered repair, rental reimbursement coverage can help pay for a temporary rental car until your vehicle's repairs are complete. This can really come in handy when your car needs extensive repairs and may be in the shop for several days or even a couple weeks. Not having to pay out-of-pocket for a rental car (or getting reimbursed by your insurance company) will help you retain access to a vehicle so you can get to and from work and/or take care of other personal errands.

These are a few of the most common types of auto insurance coverage you may see in your quote; coverage amounts and costs can vary from one insurance carrier to the next, so be sure to comparison shop for the best rate. For more information, reach out to auto insurance services.


Little-known Insurance Tips

While I have had auto insurance ever since I bought my first car at 16 years old and home insurance ever since I bought my first home several years ago, I have to admit that over the years I knew very little about insurance. I tended to just look at the price of the coverage and sign the paperwork without really looking into the pros and cons of each policy. After my friend was in a car accident recently (thankfully, she is okay!) and she said she had to pay for some of the damage to the other vehicle out-of-pocket even though she had a minimum state coverage auto insurance policy, I decided to put a lot of careful research into insurance policies and what they really offer. I want to help others by sharing the information I have learned on a blog. I hope I can help you!