Basic auto insurance policies explained

There are many different types of policies that you will come across while shopping got auto insurance. The most common and seemingly attractive is of course basic auto insurance. Many car owners assume that by labeling a policy as basic insurance companies offer the most stripped down version of auto insurance they can get. But in reality basic auto insurance consists of six major coverage types that you can adjust in order to meet your needs and that can make the policy rather costly if you choose higher amounts:

Bodily injury liability

Bodily injury liability pays for the injuries and/or death of the other car's passengers and driver in case you've caused the accident. It also pays the legal fees in case the other party decides to take the disputes to the court. It is a mandatory type of insurance coverage that you should always have at an amount not lower than local state minimums.

Property damage liability

Property damage liability coverage is another mandatory type of coverage that is also subject to state requirements. It pays for the damage you've caused to the other car or elements of infrastructure in the course of the accident.

Collision

In contrast to property damage liability, collision coverage pays for your losses in case of a road collision and it doesn't matter whether it was you or the other party who was at cause. It is not a mandatory coverage type but is still commonly included by drivers since it may come in handy quite often. Besides, if you've used an auto loan when purchasing your car it may be required contractually by the lender.

Comprehensive

As the name suggests, comprehensive coverage deals with all other possible types of loss that you car may be subjected too. This includes theft, fire, wind, explosions, riots and other types of damage that aren't produced in traffic. You may also be required to buy comprehensive coverage when using a loan.

Personal injury protection

Personal injury protection pays your and your passengers' medical bills in case of an accident and it doesn't matter who was at fault. It may be seen as a health insurance policy with limited application, but it can't be used together with your valid health insurance. You will have to choose one of the sources for coverage.

Uninsured motorist

Uninsured motorist coverage applies when you have an accident with a driver who doesn't have auto insurance or decides to flee from the site. Technically, this type of coverage acts as the other party's own insurance policy and pays for the damage caused to your car.

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