Holding The Wrong Type Of Car Insurance Might Get You Into Serious Trouble

Car insurance provides protection for the policy holder (generally the owner of the vehicle) from financial loss as a result of a car accident. To benefit from this protection the policy holder pays a monthly premium which varies according to several factors like the driver’s age, the type of vehicle, the driver’s history and the driver’s location to name a few.

There are several different types of car insurance to protect the plan holder from costs arising out of damage to the car, property damage and injury to persons involved in an automobile accident. The various different types of insurance cover include:

Liability cover which pays for damages to other people or their property as a result of a car accident and that additionally covers any court costs involved. In a lot of states this is the absolute minimum required before you are allowed to take a car onto public roads.

Collision cover which is designed to pay for damage caused to your own car in a collision with another vehicle or other object.

Comprehensive cover which will pay for several types of damage including fire, theft, malicious mischief and damage resulting from severe weather.

Medical cover which pays for any medical expenses for injuries sustained in an automobile accident.

PIP (Personal Injury Protection) cover which pays for any medical expenses when injury is sustained in an automobile accident, regardless of who caused the accident.

Uninsured and under-insured cover which provides payment for any damages sustained to you in the event that the other driver involved in a car accident is uninsured.

Every state draws up its own rules governing car insurance and some types of insurance will be mandatory in a particular state while others are purely optional. Some states, for instance, only require you to have liability cover while other states require you to have personal injury protection insurance cover.

In addition there are several states that are called ‘no-fault’ states in which insurance policy holders can recover any financial losses from their own insurer, regardless of who is found to be at fault in an automobile accident.