Every driver needs car insurance to avoid great material loses in an accident cases. And most states require it by law. Before you purchase an auto insurance policy you should decide what coverages to include in your personal insurance package and their limits. There are six basic and some additional coverages. Each of them defends you against different types of material losses which are concerned with auto accidents. All levels cover payments only up to the coverage limits.
1. Bodily Injury (BI) Liability
It is a compulsory coverage level in most states. This level covers all payments concerning injuries or death cases of others in an auto accident, if you or someone else, driving your car with your permission, is legally responsible. A policyholder and his/her family members listed in the policy are covered when driving someone else’s car with their permission. Your legal defense costs are also included.
2. Personal Injury Protection (PIP) or Medical Payments.
PIP is an optional coverage level in most states. This coverage pays for medical bills, lost wages, the cost of replacing services, funeral expenses and etc. And it is used in your or your passengers’ injury or death cases, not considering of who is responsible. It also covers you in any accident involving a vehicle, no matter you are on foot, on a bicycle or in someone’s car. These payments are commonly limited to 1-3 years after the accident.
3. Property Damage (PD) Liability
If you or someone driving the car with your permission, damage somebody’s vehicle or property, PD liability will cover its charges. In most states this coverage is mandatory.
4. Collision Coverage
If you have a vehicle loan this coverage is required. It covers pays for damage to your vehicle or a vehicle you are operating caused by potholes, a collision with another car, object or as a result of flipping over. Your collision coverage will give you money back for the repairing your car expenses even if you are at fault.