There are several different types of automobile insurance coverage and
reasons for obtaining them. Please keep in mind that these are very basic
overviews of insurance coverage types. Coverage requirements, monetary limits,
application of coverage and costs can vary from state to state based upon
statute or court decisions. So, it is best if you understand what your personal
needs are before making a decision on what types and level of coverage to
purchase. If you have any questions, ask your insurance professional before
signing on the dotted line. They should be willing and able to thoroughly go
over any details and options that you may need clarification on. If they resist
or are uncooperative, you need to consult a different insurance company or
agent. There are plenty of car insurance companies willing to compete for your
To shop, compare and learn about other financial services providers, visit one of the specific directories on the Debt Consolidation Loan Directory. Start by using the pull-down bars above or clicking on one of the links below:
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- Life Insurance Companies - Life insurance policies generally fall into three main broad types: whole, term and universal. Learn about the details and options of each type of coverage and shop for affordable premiums.
Some common types of car insurance:
Collision Insurance - In the case of an accident, in which the driver of a car is determined to be at fault (or partially at fault), their car is covered and the owner is provided financial assistance to pay for damages that occur to their vehicle. If there is total damage to the automobile, collision coverage will reimburse the owner for the current value of the car. If the car is currently financed with a loan or a lease, the current value and the amount reimbursed by the insurance company may or may not be as much as the outstanding balance. The vehicle's owner can protect themselves by obtaining GAP coverage. This type of coverage, often offered at the time a vehicle is purchased or leased, covers the difference (or gap) between the value of the automobile and what is currently owed. Collision coverage is typically optional, but may be required by a lender or finance company. In the case of lesser damage, the car's repairs are simply paid for by the insurance company. Regardless of the extent of the damage, there is a deductible to be paid by the insured party. A deductible's primary purpose to protect the insurance company against small or frivolous claims. For example, assume you have a $500 deductible. If you dent your car, it may be cheaper to simply have the dent repaired than to file a claim against your insurance and be forced to pay the $500 deductible. In addition, having accidents almost always results in higher future insurance premium payments. If you are a safe driver, and you have the financial ability to (in the case of an accident), choose a higher deductible. Choosing a higher deductible will lower your car insurance premiums, but will cost you more if you cause an accident.
Comprehensive Coverage - In order to protect you in situations where your car is stolen or damaged by something other than a collision with another vehicle, comprehensive coverage is necessary. Some examples of where comprehensive auto insurance coverage would be applicable are: auto theft (or damage caused during an automobile theft attempt), hail damage, car fires and hitting a deer or other animal. As with collision coverage, those covered by comprehensive policies are also subject to a deductible.
Liability Insurance - This coverage provides financial protection for incidents in which you may cause damage to another party's property or vehicle. It can also cover the costs associated with bodily injuries that may be suffered in the accident. This type of insurance coverage is also subject to a deductible, coverage limits and different requirements that are based upon state laws.
Underinsured / Uninsured Insurance Motorists Coverage - UM / UIM coverage (as it is often referred) is meant to cover the insured party if the at fault driver does not have insurance coverage (uninsured) on their vehicle, or what they do have is inadequate to cover the damage to the insured party's vehicle or property (underinsured). As with other types of auto insurance, the limits and application of this coverage can vary from state to state.