Understanding the Different Types of Auto Insurance Coverage

Your personal auto policy consists of several different coverage types to help prevent financial loss in various scenarios. Whether you get in a fender bender or end up with a shattered windstorm after a hailstorm, the appropriate coverage will kick in to help cover the damage.

This article will explain some of the most common types of auto insurance coverage and how they work.

Liability Insurance

Liability insurance protects you financially if you are found at fault in an accident that causes damage to another person or their property. There are two components to liability coverage:

Bodily injury liability covers the injured party’s medical expenses, lost wages, and pain and suffering.
Property damage liability helps repair or replace someone else’s damaged property, such as a totaled vehicle.

It’s important to note that liability insurance does not cover damage to your car or your personal medical expenses.

Most states require drivers to carry a minimum amount of liability insurance, but you may need higher limits to cover your risks on the road.

Comprehensive Coverage

Comprehensive insurance protects your vehicle from damages that don’t occur in a car accident or collision. Covered events may include theft, vandalism, fire, falling objects, and natural disasters. After you pay a deductible outlined in your policy, your comprehensive coverage will pay up to your vehicle’s cash value, depending on how much damage occurred.

While comprehensive coverage is technically optional, you may be required to secure coverage if you have a car loan or lease.

Collision Coverage

Collision insurance protects your vehicle from damages caused by colliding with another car or object, like a median or telephone pole. This coverage may pay to repair or replace your vehicle after you pay a deductible. Like comprehensive coverage, collision coverage is optional but often required by lenders and lessors.

Personal Injury Protection (PIP) Coverage

In no-fault insurance states, drivers file a claim with their own insurance company, regardless of who was at fault. PIP coverage is required in these states to cover a driver’s medical expenses and lost wages if they are injured in a collision.

Medical Payments Coverage

Medical payments coverage helps cover medical bills if you or your passengers are injured in an accident. This coverage is similar to PIP but does not cover lost wages.

As an at-fault accident state, Missouri does not require PIP coverage. Medical payments coverage is an optional add-on that may help cover your medical expenses after an accident.

Uninsured Motorist Coverage

Uninsured motorist coverage may help cover costs if an uninsured driver hits your vehicle or you experience a hit and run. Your policy will typically cover property damage and bodily injury caused by another uninsured driver if they are at fault.

Underinsured Motorist Coverage

Underinsured motorist coverage may help cover expenses if another driver doesn’t have enough insurance to cover your injuries or property damage. It is often combined with uninsured motorist coverage to prevent you from out-of-pocket expenses when another driver is at fault.

Gap Insurance

If your car is totaled or stolen and you owe more on your loan or lease than the vehicle is worth, your auto insurance will typically only pay up to your vehicle’s actual cash value. Gap insurance can help pay the difference between your car’s value and the amount left on your lease, so you aren’t left with an extra expense.

Gap insurance is typically required when you lease a car. Even if it’s not required, it may be wise to buy gap insurance if you have a long-term loan or only paid a small down payment.

In addition to the different types of auto insurance, there’s a lot to consider when choosing a policy, from your driving habits to your location.

Learn What to Look For

Other Auto Insurance Coverages

The different types of auto insurance mentioned above aren’t the only ones you can choose from. Here are a few optional coverages to consider:

Rental car reimbursement: If your vehicle gets damaged and requires repairs in the shop, rental car coverage will pay for a temporary rental. To receive rental car coverage, you must experience a covered loss, such as hail damage or an accident.
Roadside assistance: If your car breaks down or experiences a mechanical issue while you’re driving, roadside assistance may help cover towing, jump-starts, tire changes, and lockout assistance.
Rideshare coverage: If you use your personal vehicle for a rideshare service, your auto policy typically won’t pay when you’re working. Rideshare insurance extends coverage to when you’re waiting for a ride request or on the way to pick up a passenger.
Classic car insurance: If you own a classic or antique vehicle, you may need specialized insurance coverage. Classic car insurance typically includes agreed value coverage, which means you and the insurance company agree on the vehicle’s value upfront.
New car replacement: If your brand-new vehicle gets totaled or stolen soon after you buy it, new car replacement coverage will cover the cost of buying the exact same vehicle without factoring in depreciation.
Original parts replacement coverage: If your car needs replacement parts during a covered repair, original parts coverage will pay for replacement parts designed and built by your vehicle manufacturer.

Find the Right Auto Coverage With NEC Insurance

If you experience a car accident or vehicle damage, having the right type of auto insurance can be critical in covering your expenses. That’s why you should work with an experienced insurance agency like NEC Insurance to assess your risks and choose between the different types of auto insurance.

As a Missouri-based agency, we understand your liability insurance requirements as a Missouri driver. Our team can recommend adequate limits and optional coverages to protect you and your vehicle. We also walk you through your auto insurance options and help you make an informed decision about your personal insurance needs.