You may know that you need car insurance, but you may not know which type of auto insurance is right for you. According to IBIS World, the US auto insurance market will be $316.2 billion in 2022. However, there are many different types of insurance options out there, and they can be confusing. This article will go over the six most common types of car insurance to decide what kind will work best for your needs.
Commercial Auto Insurance
Commercial auto insurance is a type of automobile insurance that covers vehicles used in connection with the business. The policyholder can be an individual or business entity and may drive their car for personal, commercial, or both purposes. Most states require drivers to maintain commercial auto insurance if they drive a vehicle for business purposes.
You’re self-employed or are otherwise exempt from mandatory state workers’ compensation coverage due to your status as an independent contractor.
Your employer requires you to carry commercial auto liability coverage for using your car by employees in connection with the conduct of their businesses, trades, or professions.
When looking for such insurance, it would be best to check out insurance providers at your location. For those who live in New Jersey, for example, choosing a local insurance provider will be an apt selection for better coverage and convenience for commercial vehicles. As a vehicle owner in NJ, the news is not good with auto insurance premiums which have increased recently.
A bill cleared on 22nd June 2022 states a minimum of $250,000 to be included as personal injury protection (PIP), which was only $15,000. In addition, it calls for an increase of a minimum of $650 in your annual auto insurance premium. With 1.27 million drivers in NJ who consider health insurance discounts and 46% of overall drivers in NJ who take PIP cover less than $250,000, this bill will affect many drivers in NJ. Thus, to ensure competitive prices, you must ask for quotes from multiple insurers dealing with commercial auto insurance in NJ.
You can find quotes on many websites. In addition, they can also help you find the best deal possible so that you can focus on running your business and not worry about paying more than necessary for your coverage. In addition, considering local auto insurance from NJ would also mean getting better services and quick claim settlements whenever required.
Liability Insurance
Liability insurance is the most common type of auto insurance required by law. At a CAGR of 5.7% from 2021 to 2031, it is anticipated that the size of the worldwide liability insurance market will reach $432.81 billion. This coverage pays for your legal responsibility to others if you’re at fault in an accident that causes bodily injury or property damage.
This insurance covers those expenses if someone sues you over their injuries or wants reimbursement for their damaged car. Likewise, if a judge orders you to pay restitution or money, liability will also cover that expense.
The coverage for bodily injury and property damage varies depending on your state. Some states have higher minimums than others. Liability also covers any legal fees that come with defending yourself against claims made by people injured during an accident. These can be caused by your or another driver’s negligence, so long as the costs are above your policy limit.
Collision Insurance
Collision coverage is the part of your auto insurance that pays for damage to your car caused by another vehicle. Collision insurance is not required by law, but it’s highly recommended. It can protect you from paying more than your car’s worth if you get into an accident with another driver.
By paying for the cost of repairing or replacing your vehicle after an accident, collision coverage protects against some types of depreciation. If you have paid off most or all of your car loan, then it would make sense to purchase this type of policy in many cases. Then, if something happens to your car and it needs repairs after an accident, then the cost won’t come out of pocket as much as if there was no coverage at all.
Collision coverage could also cover theft. For example: let’s say someone steals a new sports car while parked on the street overnight. Since that buyer has purchased collision insurance already in the case, anything should happen. The insurance company will free replace the stolen sports car once the person files for reimbursement under their policy terms.
Comprehensive Insurance
Comprehensive insurance is the name for insurance that covers damage caused by things other than collisions, such as fires and floods. For example, comprehensive coverage will pay to repair or replace if a tree falls on your car and crushes it. In addition, comprehensive policies are often paired with collision coverage so that if another driver hits your vehicle, you’ll be covered for both injury-related and mechanical damage and vice versa.
As you can imagine, this type of coverage is more expensive than collision because it extends beyond normal vehicle usage scenarios. The price you pay will depend on what kind of risks are present in your area. Whether flooding is more common in some parts of the country than others, and whether or not any weather events have recently occurred there.
Many insurers offer comprehensive policies in combination packages with other types of policies to give you a discount on multiple types at once. However, some insurers only offer these discounts when the policies are purchased from them directly.
Uninsured Driver Coverage
It is a type of car insurance that secures you if one of your passengers or pedestrians gets injured by someone without insurance. For example, if a person without auto insurance runs into your vehicle, this insurance will cover their medical bills. It will also cover the lost wages and other expenses related to their injuries.
Uninsured driver coverage does not protect you from liability incurred from accidents that are your fault. Therefore, it’s essential to have other forms of protection if you’re at fault for an accident caused by negligence or recklessness. It also doesn’t cover your vehicle damaged in an accident with another motorist who doesn’t have auto insurance. It usually falls under collision coverage instead.
Medical Payments Coverage
Medical payments coverage is a type of no-fault insurance. It provides coverage for medical bills incurred due to an accident caused by you or your vehicle. In some states, this coverage is also known as personal injury protection (PIP). It is often provided through your auto insurance policy rather than offered by an optional add-on.
Your state’s Department of Motor Vehicles (DMV) may provide medical payment coverage. Still, it might not be available everywhere in the United States. It is because each state can have laws regarding insurance coverage and where such policies can be purchased from licensed agents. If you live in one of these states, it’s pretty easy to obtain this type of policy on your own. However, this isn’t so simple if you live somewhere else. Therefore, you’ll need to research before getting anything started.
Right Auto Insurance Can Make a Huge Difference in Your Driving Experience
MarketWatch reports that a driver’s average annual auto insurance premium which they pay is $1,732 per year. Therefore, there is no denying how essential it is for those who have invested this money. Knowing what type of policy is right for you is necessary, from the price you pay to the coverage you receive. Your circumstances and preferences will determine how much you pay for insurance. Knowing what kind of coverages are available and how much they cost will certainly help if you’re looking to protect your vehicle or yourself from financial loss. In addition, it will ensure that whichever company provides offers an affordable rate on their products and services.
