Car Insurance: Types of Coverage All Drivers Should Know About

Shopping for car insurance is a complex task that’s filled with uncertainty for many motorists. It can be a frustrating process. On one hand, there’s the obvious desire to save money and reduce premiums as much as possible. But on the other hand, trying to save too much money on car insurance by cutting out important coverage can leave you with a huge bill in the event of an accident.

Worse yet, skimping on car insurance may leave you with less than the minimum required coverage in your state, thereby hitting you with a hefty fine in addition to the cost of an accident.

To avoid these pitfalls, you should be familiar with these basic types of car insurance coverage:

Bodily Injury Liability (BIL)
BIL coverage is considered the most important coverage when choosing car insurance. Even relatively moderate auto accidents can cause significant injury to others, which can trigger shockingly high medical costs. For this reason, BIL coverage is required in many states. A key part of selecting the amount of this coverage depends on your assets. The more you have to potentially lose in a lawsuit, the more BIL coverage you should have on your car insurance policy.

Property Damage Liability (PDL)
This coverage pays for other people’s property if your car damages it. Depending on the situation, this means the other person’s item may be repaired or replaced, depending on the level of damage and the insurance company’s claim policies. Also, note that “property” can mean a wide range of things. In most accidents it refers to a car, but it can also apply to anything you damage with your vehicle.

Personal Injury Protection (PIP)
PIP coverage pays for injuries to the driver and occupants of a car involved in an accident, without regard for who was at fault. This coverage can be a worthwhile addition to your car insurance policy. However, homeowner’s insurance policies often include at least some PIP coverage as well, so check that first to avoid duplicating coverage and paying more than you have to.

Collision and Comprehensive
This coverage pays for repair or replacement of your vehicle in the event of accident, vandalism, theft, or natural disaster. It can be an important coverage to have on your car insurance policy. Many things that can happen to your vehicle don’t involve other motorists. Therefore, such damage can’t be covered by anyone else’s policy, as would be the case if you’re hit by another car and that driver is liable.

Uninsured Motorist
Although many states require all drivers to have at least basic car insurance, a significant number of drivers still don’t. For this reason, it’s generally worthwhile to get uninsured-motorist coverage, which pays your medical costs if you get into an accident with someone who doesn’t have insurance.

Rental and Towing
Most insurance companies offer some kind of coverage that pays for the cost of renting a car and having your damaged vehicle towed in the event of an accident.

This type of coverage pays for damage to your car’s glass. Windshields are typically the most likely to crack or break, and for many vehicles they’re $500 or more to replace. So this coverage is worth considering.