There are many types of automobile insurance that go beyond the state-mandated liability coverage. These include Medical Payments Insurance and Personal Injury Protection. This covers more than just lost wages, funeral expenses and pain and suffering.
Medical Payments Insurance – This insurance covers medical expenses (for you and anyone else) that arise from your vehicle’s use, regardless of fault. It pays regardless of fault so it would pay for your medical expenses if your car were to hit a fencepost. This type of insurance can be purchased in increments from $1,000 to $5,000. This insurance covers your immediate family members, who live in your household, while they travel in another driver’s vehicle. It would also cover medical expenses. Medical Payments Insurance can also be called “MedPay”.
Personal Injury Protection (PIP) insurance covers the named insured as well as any members of their household who are related to them by blood, adoption, foster, or stepchildren. PIP pays for medical expenses for injuries suffered in an auto accident. This coverage is valid up to three years from the date of the incident. PIP covers medical expenses as well as lost wages, funeral expenses and loss of services (payments to others for work that you are unable to do). Like MedPay, Personal Injuries Protection will pay for your medical expenses regardless if you are at fault.
Collision – This optional insurance covers damage to your vehicle in an accident. Collision insurance will cover your car if you’re involved in an accident, even if the other driver doesn’t have liability coverage. Collision insurance covers repairs to your vehicle regardless of how serious the accident is. However, your insurance company can only pay the difference between your salvage value and your pre-accident cash value. Let’s assume your car is worth $10,000, and that the salvage value of your car is $1,000. Your insurance company will only pay $9,000 for repairs regardless of the car’s actual value. Collision insurance offers an optional “replacement costs coverage” for vintage or new cars. This coverage covers the replacement cost for a new or vintage vehicle. Leasing companies and lenders will often require clients to have Collision Insurance, even though it is not required by law.
Comprehensive – Comprehensive insurance is very similar in concept to Collision Insurance. The major difference is that Comprehensive covers damage to your car by “unknown entities” or “an Act of God”. Other than an auto accident, Comprehensive also covers vandalism and flood. Your insurance company will only pay the fair market value, less your deductible. Lenders and leasing companies may require clients to have Collision Insurance, even though it is not required by law.
Gap Insurance – This insurance covers the difference between the amount one owes and the value of the car as determined by the insurance company. You might owe $15,000 for a car, but you manage to damage the vehicle in an accident. Your car’s value is $13,000. This is what your insurance company will pay. Now, you’re stuck paying $2,000 for a car that doesn’t exist. Gap insurance would typically cover the $2,000 difference. Gap Insurance has some restrictions and limitations. Gap Insurance is not available for older vehicles and not all insurance companies will provide it. To find out more about Gap Insurance coverage, it is a good idea to speak to your insurance company.
Uninsured or Under Insured Motorist – This type of insurance covers your vehicle and you in the event that the other driver is not properly covered and is found to be at fault. Although not all states require this type insurance, a few do. This coverage is recommended because it will make it very unlikely that you receive payment for any damages to your vehicle or other drivers involved in a collision with an uninsured motorist. UM/UIM coverage is usually affordable and available in a variety of levels.