When you own a vehicle, taking out car insurance is a legal requirement to protect you in the event of an accident. However, understanding the different levels of cover and technical terms can be complex. Knowing exactly what your insurance covers before you hit the road is crucial to avoid unpleasant surprises. In this article, we'll explain how to understand your car insurance cover so you can drive with confidence.
Types of car insurance cover
When you buy car insurance, there are several types of cover available. It's important to understand each one so you can choose the one that best suits your needs. Common types of car insurance cover are:
- Third-party liability
- Personal injury protection
- Property damage protection
- Theft protection
- Collision coverage
- Comprehensive protection
- Protection against uninsured drivers
Personal injury and medical expenses protection
Personal Injury and Medical Expense Protection covers health care costs for you and your passengers, anyone involved in the accident can benefit from this cover. This insurance can cover the costs of hospitalization, medical care and rehabilitation services. There are two types of personal injury and medical expense protection: personal injury protection (PIP) and medical expense protection.
What is personal injury protection (PIP)?
Personal Injury Protection, or PIP for short, is a mandatory coverage in some states in the United States. This coverage pays for medical costs in the event of a car accident, and anyone involved (driver or passengers) is eligible for this coverage. PIP covers medical expenses, lost wages and other accident-related expenses.
How does PIP work?
PIP is often referred to as "no fault" or "first party" because it covers medical costs regardless of who is at fault or who is responsible for the accident. PIP has a cap, which means that it only covers a specific amount for each person involved in the accident. In addition, there may be deductions for medical expenses.
Understanding medical expenses cover
Medical expenses cover is similar to PIP, but it is optional. If you opt for this cover, it will cover the medical costs for you and your passengers. This cover may be limited to a certain amount, and there may be deductions for medical expenses.
Understanding liability insurance and minimum limits
Liability insurance is mandatory coverage in all states in the United States. This coverage pays for damages and financial losses suffered by another person if you cause an accident. There are two types of liability coverage to consider: personal injury coverage and property damage coverage.
Additional coverage options to consider
Collision coverage
Collision coverage covers damage to your own vehicle in the event of an accident. This coverage is optional, but may be mandatory if your vehicle is financed or leased.
Comprehensive cover
Comprehensive coverage covers damage to your vehicle caused by factors other than a car accident, such as theft, vandalism and natural disasters. This coverage is optional, but may be mandatory if your vehicle is financed or leased.
Cover for uninsured or underinsured drivers
Uninsured or underinsured motorist cover covers damage to you or your vehicle in the event of an accident with a driver who has no insurance or insufficient levels of insurance.