About 12.6% of drivers don’t have car insurance. While the rest of the population has auto insurance, people have different types.
You might not realize that there are many types of car insurance to choose from when you need it.
Types of Car Insurance Policies
If you learn more about these different types, you’ll be able to choose the best type for your needs. Continue reading this guide to learn more about the different options.
Liability Coverage
The auto insurance industry offers liability coverage more often than any other type of car insurance. Having liability insurance provides the legal requirements that most states have, and it mainly protects others.
Liability insurance also protects you, though.
When you have liability protection, your insurance pays for damages if you cause them to other people and vehicles. It also prevents people from suing you for not having coverage.
Buying a liability-only plan is the most affordable insurance type you can get, but it might not be enough coverage for your needs. It certainly isn’t enough if you owe money on your car.
If this is the case, you might need full-coverage insurance.
Full-Coverage Insurance
The best car insurance policies generally fall into this category of full-coverage insurance. Full-coverage offers several coverage types, including the following two:
Collision Coverage
Collision coverage is one vital part of a full-coverage policy. It protects you when you cause wrecks that lead to damages to your vehicle. When this happens, you can file a claim with your insurance company.
They’ll pay for your damages, and you’ll only be responsible for paying the deductible.
Comprehensive Coverage
Comprehensive is the other part of full-coverage insurance. It protects you from other types of damages you might encounter to your vehicle.
For example, suppose a tree fell and landed on your car. You could file a comprehensive insurance claim to receive compensation for your car’s damages.
When car ownership means that you have a loan on your car, you’ll need collision coverage and comprehensive coverage.
Ride-Sharing Insurance
Vehicle ownership might also require purchasing other types of car insurance. For example, do you drive for a ride-sharing company? If so, you’ll need to purchase a ride-sharing plan.
When you work for a ride-sharing company, the company might provide insurance coverage, but this isn’t enough. Your auto insurance provider might not cover you while you are providing rides.
If you want to protect yourself, you’ll need to buy the right type of coverage when you do this type of job. A ride-sharing plan provides all the right protection for you, your car, and your financial position.
You might pay more for this coverage, as it increases your risk level to the insurance provider.
Gap Coverage
Another vital type of car insurance coverage you might need is gap coverage. You’ll only need this if you have a new car. You might also need it if you have no equity or negative equity in your vehicle.
Gap coverage only protects you if you ever total your vehicle. When you total it, your normal auto insurance plan only provides compensation equal to your car’s value just before the accident.
If you have negative equity in your car, your insurance compensation might not cover the amount you owe on the loan. That’s why you need gap coverage.
If this occurs, your gap coverage kicks in and pays the difference. You should never have a new car with a loan without having gap protection.
SR-22 Insurance
There are times when high-risk drivers might need SR-22 insurance. SR-22 insurance generally costs more than other insurance types, but it’s a necessity if you need it.
SR-22 insurance is something drivers might need after a DUI. They might also need it if they are ever caught driving without insurance. Some people even need it after getting several traffic violations.
If you need it, you’ll receive a letter from the court or Bureau of Motor Vehicles. Once you find out you need it, you’ll need to contact some SR-22 insurance agents.
They can give you quotes for coverage, and you can choose the best plan for your budget and needs. SR-22 isn’t really insurance. Instead, it’s proof that you have an auto insurance plan.
Classic Car Insurance
When you consider all the types of cars you can purchase, some fall into a separate category. This category is classic cars.
If your car meets the age requirements that insurance companies use, you might need a special type of car insurance called classic car insurance.
Classic car insurance lets you insure an old car for its value. In most cases, this type of insurance is affordable, but it’s not always available from all insurance companies.
If you have an old car, you might want to talk to your insurance agent to see if they offer classic car insurance, as this might be the best type for your vehicle.
Pay Per Mile
One last type of car insurance you might want to consider is pay per mile. Pay per mile insurance lets you control how much you spend on your auto insurance.
When you buy this type, you agree to pay a specific rate for your insurance coverage per mile you drive. You might need to install a system in your car that tracks your mileage for the insurance company.
While this works well for some people, it’s not the most beneficial type of car insurance for most people, as most people drive too many miles to make this type of coverage affordable.
You Can Find Other Types of Car Insurance, Too
As you can see, not all car insurance is equal. Insurance companies offer many types of car insurance, and you can pick the right type for your needs, risks, and desires.
Having the right type of coverage is vital for your financial protection and legal reasons. A car insurance agent can help you decide what types to choose.
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