Before purchasing your auto insurance, find out if the coverage it provides is the right one for you and your vehicle. According to data from the Insurance Research Council, more than 4 million drivers in California do not have auto insurance. Meanwhile, Paulson & Nace stated that there were 30,800 fatal car crashes nationwide in 2012, and thousands more that caused serious bodily harm. According to general.com these are the top five types of coverage offered by auto insurance, and how they work in the event of an accident.
1. Uninsured Motorist Coverage (UM)
This insurance covers your medical expenses in the event where the person at fault in the accident is uninsured or has insufficient insurance to cover all costs for the damage caused to you. This type of insurance also includes a person in the event that is involved in a hit-and-run accident. For example, if you have a pedestrian accident, or if you were riding a bicycle and another vehicle crashed into you.
2. Med-Pay coverage
This policy covers medical expenses as a result of an automobile accident, regardless of who was at fault for the accident. But every insurance company has its restrictions regarding this policy. Some also pay for funeral expenses, passenger injuries, injuries if you were in a pedestrian accident, or if you were riding a bicycle and a car crashed into you. It also covers expenses for dental treatment as a result of an accident.
3. Liability Insurance
If you are at fault, the cause of, or responsible for an accident, your insurance company pays for the property damage and medical expenses of those affected in the accident. In some cases, this type of insurance even covers the legal cost of accident attorneys if the case goes to trial. Almost all states require at least a minimum of coverage for this type of insurance.
4. Collision insurance
This type of insurance covers the cost of repairs of your car; this is important if you recently bought a car, or if your car is expensive and you are involved in an accident. If the cost of repairs is higher than the value of your vehicle, this insurance covers up to the amount of the total loss.
5. Other than Collision Coverage (OTC)
This type of insurance covers damage to your vehicle for any reason other than a collision, such as theft, fire, or earthquake. But this insurance is expensive, and sometimes unnecessary if you can easily replace your vehicle. Also, the incidents you cover don’t happen often; for example, if you live in the desert, it’s not very likely that a tree will fall on your car.
As you can see, there are several types of basic insurance. Some are required by law, and some are not; some are important, and some are not. Anyway, it’s good to be insured because the future is unpredictable.