6 Car Insurance Types Everyone Should Know About

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Did you know that approximately 12.6% of people on the roads drive without any car insurance? That might seem like a high number, but it’s true.

Why do people drive without insurance? There are several common reasons, but one reason is that some people don’t know they need it. Others don’t understand what type of car insurance to buy.

If you want to drive legally, you’ll need to buy auto insurance. You’ll also need to make sure you buy the right type.

To do this, you might want to know the most common car insurance types you can buy. Here are six types to know.

1. Liability 

If you do not have an expensive car or a loan on it, you might be able to get by with purchasing a liability-only car insurance policy.

All auto insurance policies include liability insurance, as it’s the basic form of coverage that all drivers need. You can buy a policy that only offers this form of coverage, though.

When you have liability coverage, you have the protection you need if you cause an accident that leaves another driver injured or needing car repairs. Your liability coverage compensates other drivers in these situations.

Your liability coverage also prevents you from getting sued. If you drive without it and cause an accident, the victim could sue you personally. If you lose the case, you might lose all your assets.

Liability coverage also provides the legal requirements that you need to drive. Therefore, you should have liability coverage if you plan on driving.

2. Collision

There are many types of car insurance products you can get, and the next type is collision coverage. Collision coverage protects you and your car, even if you are the person who causes an accident.

If you owe money on your car in the form of a car loan, your lender will require that you carry collision coverage. By requiring it, the lender receives payment for your car if you wreck it or total it.

The benefit of having collision coverage is that you have the protection you need for your car. If you cause a collision, your insurance company will pay for the damages to your vehicle.

You will have to pay a small amount toward the repairs, and this amount varies. Insurance companies call this a deductible, and you can choose the amount when you buy the policy.

3. Comprehensive

Comprehensive insurance is another one of the common auto insurance types that many people purchase. Once again, if you have a loan on your car, your lender might require this type of coverage.

Comprehensive is like collision coverage in one way – it protects your vehicle. The difference is that comprehensive coverage focuses on damages from things other than collisions.

With comprehensive coverage, you can file a claim to receive compensation if your car experiences damages from hail, wind, fire, or theft. It also covers damages that result from animal collisions.

Most people purchase comprehensive and collision coverage together, as they are both vital, yet they cover different things.

4. SR-22 

SR-22 insurance (also called SR22 insurance) is a special type of policy that high-risk drivers generally need.

In fact, SR-22 is not necessarily even insurance. It’s more like the documentation you need to prove that you have auto insurance.

When you get too many tickets, a DUI, or driving violations for driving without insurance, you might need to buy a car insurance plan that comes with SR-22.

When you do this, your insurance company provides the Department of Motor Vehicles (DMV) with a form that states that you have car insurance.

To get SR-22, you must purchase a car insurance policy from a company that offers SR-22 coverage. Once you pay your premiums, they will give you the SR-22 form.

They will also send a copy to your local DMV. It’s important to know that you can lose your driving privileges if you fail to purchase this coverage when you need it.

Therefore, you should buy a policy as soon as you discover that you need it.

5. GAP Coverage

If you own a new car with a loan, you might need GAP coverage. GAP coverage is a unique form of car insurance that you can ask for when requesting car insurance quotes.

GAP insurance serves one important role, and you’ll only need it if you ever total your vehicle. When you total a car, your insurance company only reimburses you for your car’s value just before the accident.

Unfortunately, you might owe more on your car than this amount. If so, you will owe your car lender the difference unless you have GAP insurance.

If you have GAP insurance, your insurance policy covers this difference, leaving you owing nothing to your auto loan lender for your vehicle.

You can learn more about the costs of GAP coverage and other auto insurance types by checking out insuredasap.com.

6. Under insured and Uninsured Coverage

The final type of car insurance to know about includes two separate types of coverage. The first is under insured coverage, which protects you from people driving without enough auto insurance protection.

The second type is uninsured motorist coverage, which protects you from people driving without any car insurance.

As mentioned above, many people drive without car insurance. If one of these drivers collides with you, they should pay for your car’s damages.

If they don’t have car insurance, they’d have to come up with the money out of their pocket. Unfortunately, they might not have any money to use for this purpose.

If you have under insured and uninsured coverage, your policy covers you in these types of situations.

Choose From These Car Insurance Types 

After learning about these common car insurance types, you might have a better idea about which types you need. If you’d like to learn more, you can talk to a car insurance agent.

If you enjoyed this article, make sure you check out the rest of our blog for more interesting articles.