| For most drivers, basic liability coverage is enough to | | | | your car. Let's say your car is worth $10,000 and the |
| satisfy their insurance needs. However, there are | | | | salvage value is $1,000. In this example, your insurance |
| additional forms of insurance available for varying | | | | company is only required to pay up to $9,000 in |
| circumstances. This article will discuss the optional | | | | repairs, regardless of what you think the value of your |
| policies that you can purchase. | | | | car is. Collision insurance does have an optional |
| | | | | "replacement cost coverage" for new or vintage cars. |
| There are a many forms of automobile insurance | | | | This additional coverage provides for the replacement |
| outside of typical, state mandated liability coverage: | | | | cost of the new or vintage car. Although not required |
| Medical Payments Insurance, Personal Injury Protection | | | | by any state, lenders and leasing companies will |
| (referred to as "PIP" - covers a broader area, such as | | | | typically require clients to carry Collision Insurance. |
| lost wages, funeral expenses, and pain and suffering), | | | | Comprehensive - This type of insurance is very similar |
| Collision, Comprehensive, Gap Insurance, Uninsured and | | | | to Collision Insurance; the major differing factor is that |
| Under Insured Motorist. | | | | Comprehensive covers damage to your vehicle by an |
| Medical Payments Insurance - This type of insurance | | | | "unknown entity" or "an act of God". In addition to an |
| coverage pays for medical bills (for you or anyone | | | | auto accident, areas of coverage include the following: |
| else) up to a certain amount arising from the use of | | | | vandalism, hurricane, flood, theft, and fire. Your |
| your vehicle regardless of fault. Theoretically, because | | | | insurance company is only required to pay up to the |
| it pays regardless of fault, the insurance would cover | | | | fair market value of your car minus your policy's |
| your medical expenses if you were to crash your car | | | | deductible. Although not required by any state, lenders |
| into a fencepost. This type of insurance is usually sold | | | | and leasing companies will typically require their clients |
| in increments of $1,000 to $5,000. The coverage | | | | to carry Collision Insurance. |
| extends to your immediate family members (who | | | | Gap Insurance - This insurance pays for the difference |
| reside in your household) while they are passengers in | | | | between what one owes on a vehicle, and what the |
| another person's car, and would cover medical | | | | insurance company claims your car is worth. For |
| expenses regardless of the other driver's own | | | | example: you owe $15,000 on a car and you |
| insurance policy. Medical Payments Insurance is also | | | | somehow manage to total the car in an accident. Your |
| referred to as "MedPay". | | | | insurance company determines your car is only worth |
| Personal Injury Protection - "PIP" insurance covers the | | | | $13,000, so that is all they will pay. You're now stuck |
| "named insured" along with members of his or her | | | | paying off a $2,000 loan for a car that no longer |
| household who are related by blood, marriage, | | | | exists. Gap insurance would normally cover that |
| adoption, and/or foster and step children. PIP covers | | | | $2,000 difference. There are some limitations and |
| medical expenses for injuries sustained in an auto | | | | restrictions for Gap Insurance. For example: Gap |
| accident up to three years after the date of the | | | | Insurance is typically unavailable on older cars and not |
| incident. In addition to medical expenses, PIP can also | | | | all insurance companies will offer it. It's best to check |
| cover lost wages, funeral expenses, and loss of | | | | with your insurance company to get the full details on |
| services (payment to others for work you can't do). | | | | Gap Insurance coverage. |
| Similar to MedPay, Personal Injury Protection will cover | | | | Uninsured and Under Insured Motorist - Just like the title |
| your medical expenses regardless of driver fault. | | | | states, this type of insurance covers you and your |
| Collision - This optional form of insurance pays for | | | | vehicle in case the other driver is not properly insured |
| damage to your car in an auto accident even if you're | | | | and he or she is determined to be at fault. Not all |
| the at fault driver (such as crashing your car into a | | | | states require this type of insurance, but a handful do. |
| tree or a telephone pole). Collision insurance would also | | | | It's recommended that you purchase this coverage |
| cover repairs to your car when you are involved in an | | | | because if you are involved in a fender-bender with an |
| accident and the other driver does not have liability | | | | uninsured motorist, it is highly unlikely you will receive |
| coverage. Although collision does cover repairs to your | | | | any payment for damages to you or your vehicle if |
| car regardless of the situation, there are limits to the | | | | the other driver is at fault and uninsured or under |
| amount of repairs: your insurance company is only | | | | insured. UM/UIM is generally affordable and can be |
| required to pay the difference between the salvage | | | | purchased in varying amounts of coverage. |
| value of your car and the pre-accident cash value of | | | | |