- If you cause an accident that injures someone or damages another person's vehicle or private property, it's likely you'll be held accountable for the other party's damages and medical bills. Liability coverage ensures that those costs don't come out of your pocket. Two types, bodily liability and property liability, are available at different levels, with bodily liability coverage levels usually much higher than property liability coverage. Liability coverage also ensures that your insurance company provides you with a legal defense team. Liability insurance is mandatory at different levels in every state.
- Although it's illegal to drive an uninsured vehicle, that doesn't keep such vehicles off the road. If you're in an accident that's the fault of an uninsured driver, you have no means to recover your medical bills and property loss outside of lawsuit. Uninsured motorist policies cover your expenses if you're in an accident caused by an uninsured driver.
- Liability policies provide coverage to pay for damages to another driver's vehicle you cause, but they don't help you pay for your own repairs. Turn to a collision policy to help cover those costs. Collision policies cover most types of damage you can inflict to your car during the course of driving, whether it's from smashing into another vehicle or plowing into a concrete highway divider. It doesn't cover other incidental damage, such as if a tree falls on your hood. Many financers require drivers to carry collision insurance as a contingency of the loan.
- If your vehicle sustains damages not caused by another motorist's poor driving or your own driving mishaps, you'll need a comprehensive policy if you want the insurance company to help pay for your repairs. True to their name, comprehensive policies cover just about any other kind of property loss that can send your car to the shop, from weather-related damages, vandalism, fire and even theft. If your car's financed, your bank may require you to hold a comprehensive policy until you pay off the loan.
- Several other, less common types of insurance are available from some insurers. Rental reimbursement pays for a rental car if the insured vehicle is in the garage for repairs, and emergency road policies pay for towing and other roadside assistance needs. Gap insurance covers the amount between a totaled car's settled value and the amount left on a loan. For example, if you wrap your two-year-old sports car around a telephone pole and total it, you may receive $12,000 from your collision policy. If you owe $15,000 on it, gap insurance covers the $3,000 difference.
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