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What types of insurance are available?

The sheer amount of the different types of insurance coverage available to a motorist can be overwhelming. The type of system your state operates under (i.e. the Tort system or the No Fault system) will determine the types of coverage you will be required to carry for your vehicle. The monetary amounts you are required to carry for each form of coverage will vary by state as well. You can discover what system your state utilizes by calling your local Department of Motor Vehicles. A comprehensive understanding of the most common types of insurance available to you and their functions will benefit you in selecting the right amounts of coverage. 

Liability insurance and collision insurance are two of the most common forms of coverage available on the market. Currently, forty seven states in the country require a motorist to carry some form of liability insurance. Collision insurance is required by law only if you own a vehicle with an outstanding loan on it. Liability insurance will cover another party's medical expenses and property damage repair costs if you are found to be at fault in an accident. However, it will not assist you in covering your own expenses. If you are found to be at fault in an accident, collision insurance will provide a monetary amount towards the cost of your vehicle's repairs that will not exceed the current value of your vehicle.

Comprehensive insurance is an optional form of coverage that acts as a supplement to collision insurance. This form of coverage will cover the total cost of your repairs from an accident, regardless of who is considered to be at fault in an accident. The protection provided by comprehensive insurance extends to cover damage to your vehicle that may be caused by an "act of nature", such as a tornado.  Also, if your vehicle encounters some sort of vandalism or theft, comprehensive insurance will cover the damage. Thus it may be important to seek this coverage if you live in a crime-ridden neighborhood.

Personal injury protection insurance (or PIP) is a form of coverage that provides for the immediate medical expenses of you and your passengers in the event of an accident. Because most motorists are covered by comprehensive health insurance, a lot of people do not elect to carry more than the minimum required amount of this insurance.

Uninsured motorist protection insurance is beneficial if you are struck by a motorist who is not insured. It will cover the cost of your repairs, as well as your medical expenses. Undersinsured protection is often linked to this, providing funds to cover any expenses that the at fault party's insurance does not allocate for. You will be required to carry these forms of insurance if you live in a state that operates under a no fault policy. However, there are a handful of states that require motorists to carry uninsured motorist protection even if they do not follow the guidelines of a no fault policy. Being armed with the knowledge of how each form of coverage can work for you will enable you to determine what you will need from your policy.

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