Stepping into the territory of car insurance for the first time can be an overwhelming experience. After all, there are so many things to learn and consider. Since insurance requires a huge investment, we always recommend that you do your homework before setting out on a policy hunt.
If you are a first-time buyer, then there are a lot of things you need to learn. But today we will start with the basics. One of the first steps towards finding the right insurance policy for your car is to understand your requirement and to see which policy can cater best to it. And to do so, you need to know what types of auto insurance are available in the market.
If you opt for reputable insurance marketplaces like https://www.surex.com/Insurance/auto-car/Alberta, they can guide you better on this subject through one-on-one interaction. Be sure to check the features of your comprehensive policy because not all insurers offer flood, hail & storm cover.
6 Types of Auto Insurance
To help you get started with the different types of auto insurance, here is a detailed list of the 6 common types of auto insurance.
1. Third-Party Liability Insurance
Third-party liability insurance is required by law in most Canadian states. This policy is meant to take care of the expenses of the other party involved in an accident for which you were at fault. The policy takes care of the expenses for bodily injuries as well as property damage of the victim. However, it doesn’t compensate for any of your losses for an at-fault accident.
In addition to being legally required, there is a huge benefit of this coverage. Let’s say you were involved in an accident and caused a lot of damage to the other driver. In this case, you will be required to pay for the expenses of the victim. If you fail to do so, they might file a lawsuit against you. Lawsuits, as you know, are really expensive. In a situation like this, your third-party liability insurance will take care of your legal expenses as well.
2. Uninsured Motorist Coverage
It is true that for an at-fault accident, it is the driver at fault who is supposed to pay for the expenses of the victim. However, the reality does not often match with the written laws. It might happen that the driver at fault does not have third-party liability insurance to cover the expenses. In this case, you can certainly file a lawsuit to make the driver pay for your losses. But following the legal procedure to get your compensation will take a long time.
Before you file a lawsuit, you need the financial means to pay your medical expenses as well as repair your car. That’s where an uninsured motorist coverage steps in. This policy kicks in if the at-fault driver does not have third-party liability insurance. This policy will take care of both your medical bills and the finances of your car’s repair.
A policy similar to this is underinsured motorist coverage. The only difference here is that, for uninsured motorist coverage, you would receive compensation if the driver at fault does not have insurance. However, in underinsured motorist coverage, you will receive compensation from your insurance provider if the driver does not have sufficient liability insurance.
3. Collision Coverage
When you take your car out on the road, you open the doors to several potential causes of damage. One of the most popular causes of damage is a collision. As the name suggests, collision coverage finances your car’s repair if it was damaged in a collision.
A collision can be of two types:
- If your car crashed with another car on the road.
- If your car crashes with a tree or pole without the involvement of another driver.
In both cases, your insurance company will pay for the losses. That’s the advantage of collision coverage. Under this, you get compensation for your loss even if you are at fault. The only catch here is that you have to pay the pre-decided deductible first for the policy to kick in.
4. Comprehensive Coverage
Just because a car is not out on the road, it doesn’t mean it’s safe from potential threats of damage. Collisions and car crashes are not the only situations that can damage your car.
Several other factors have equal chances of damaging your car. This includes:
- Animal attack
- Natural disaster
- Potholes (depending on your policy)
- Other unforeseen accidents like falling objects or tree branches
Comprehensive coverage ensures that no matter what happens, your car is taken care of. Even if it is damaged severely, you will not drown in debt trying to repair it. Also, just like collision coverage, you need to pay the deductible first before you can claim the coverage.
5. Medical Payments Coverage
Depending on the kind of policy package you have, medical payments coverage may pay for the medical bills related to car accidents. For example, if you have collision coverage for your car, it will only take care of the car’s damage. In this case, if you too were severely injured, you would need a policy that can cover the huge medical bills. That’s where medical payments coverage steps in.
The best part about medical payments coverage is that you can claim the coverage regardless of who was at fault.
6. Personal Injury Protection Coverage
Personal injury protection coverage is a little similar to medical payments coverage. Under this coverage, your medical bills for accident-related injuries will be covered. In addition to that, you will also get compensated for the loss of income owing to the accident. However, the compensation amount depends on your coverage limit.
Moreover, your funeral costs will be taken care of by this policy in case you lose your life in the accident.
So these were the six common types of auto insurance that you need to know about before you set out to buy auto insurance. Note that this list isn’t exhaustive and there are several smaller policies as well as add-ons. This includes towing insurance, classic car insurance, rental insurance, etc. But these are mostly additional insurance coverages. This means that they will be added on top of the main policies mentioned above.
Read Also: 5 Things You Need to Do Right After a Car Accident