Optional Auto Insurance Coverage

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