Types of Auto Insurance and Coverage
There are a lot of different types of insurance coverage, and it can be pretty confusing if you don't know how to tell them apart. Understanding these key distinctions will make sure you know what your options are so you can make the best decision.
Comprehensive vs. Collision Coverage
Collision coverage is a basic type of insurance policy that will only cover damages to your vehicle in a collision. Comprehensive coverage goes a step further and protects your vehicle against other types of damages. For example, comprehensive coverage would likely cover the damage from a tree falling on your car, or if your car (or one of its parts) was stolen.
Property Damage Liability (PDL) & Bodily Injury Liability (BIL)
Required by law for drivers in many states, PDL covers damages to other vehicles and BIL covers injuries or deaths to others for which you are at fault. This will not cover your injuries or those in your vehicle. Keep in mind that your policy will have a limit to how much it will pay for damages, so it's advised you have a policy with as much coverage as you can afford.
Tort vs. No-Fault
Depending on which state you live in, your insurance policy will be significantly different. If you live in a no-fault state, insurance policies are set in place solely to cover you in the case of a collision, regardless of who is at fault for the crash. This makes lawsuits much more rare (though you can still sue someone under some circumstances).
If you live in a tort state, however, the cost of a collision is paid by the person deemed to be at fault. In some cases, it is based on a percentage of fault, so someone deemed to be 75 percent at fault for the accident would pay 75 percent of the costs for repairing damages.
Gap coverage will protect you should your vehicle be stolen or totaled and the amount you would receive from the insurance company as compensation is less than the amount you still owe in payments for the vehicle. The "gap" between what you're paid and what you owe requires gap insurance.
Uninsured/Underinsured Motorist Coverage
This is an auto insurance option specifically designed to cover should you be in an accident with an uninsured or underinsured driver who, therefore, cannot pay their required end of your expenses.