Although it is often taken for granted, car insurance is one of the most important services provided to consumers, functioning as a financial safeguard against costly events such as accidents, theft, and vandalism. While most people are acutely aware of the different marketing campaigns employed by many of the different car insurance companies, they are often woefully uninformed about the different types of car insurance options available to them. Motorists need to be aware of the different types of car insurance to make sure they are adequately covered.

Liability

Liability coverage is the most common type of car insurance and is a requirement in almost every state in the US. Liability insurance covers the expenses and damages to the opposing driver when a motorist is determined to be at fault during an accident. This includes all types of damage a motorist causes to another person's vehicle or property, as well as any medical expenses that may arise. It is important to note that liability coverage limits the amount that an insurance company will pay for these expenses, any more of which will have to be covered by the at-fault motorist.

Collision

Collision coverage will help pay for the damages suffered by a motorist's vehicle in an accident, and can also help pay for a replacement vehicle if the original vehicle is totaled. Once the motorist pays the deductible, the insurance company will determine the amount needed for repairs after consulting with the authorized garage or auto body shop. If the car is totaled, the insurance company will reimburse the motorist for the value of the vehicle at the time of the accident.

Comprehensive

Comprehensive coverage will pay for damages to a vehicle apart from a vehicular accident outside of a car owner's control. Common events covered by this type of coverage would be vandalism, weather damage, or animal-related incidents or accidents such as hitting a deer or a bear. As with most other types of insurance, customers must pay a deductible before they can be reimbursed for the damages incurred in these types of events.

Uninsured/Underinsured Motorist

Uninsured motorist coverage will pay for a motorist's medical costs and car damages if the at-fault driver doesn't have insurance, whereas underinsured motorist coverage will cover medical costs and car damages if the at-fault driver's liability coverage won't cover the full amount of these expenses. The application and requirements for this type of insurance vary greatly between states, with some states requiring a driver to be legally at fault for this coverage to be applied and others not considering drivers to ever be legally at fault for an accident.

Umbrella

An umbrella insurance policy is an added layer of liability coverage that will go beyond the basic level of coverage offered by most liability plans. Motorists must already have a standard liability coverage policy before they can get an umbrella policy since the umbrella policy will only kick in once the liability policy is used up. Businesses or individuals who are more likely to be victims of lawsuits or be involved in costly accidents such as major transportation companies, teen drivers, or wealthy individuals are generally the most common beneficiaries of an umbrella policy.

Miscellaneous

Some insurance companies also provide lesser-known coverage options which are not usually used by most motorists. Rental reimbursement coverage plans are available to individuals who need access to a car while their vehicle is being repaired. Classic car insurance can help cover the different complications arising from vehicles that are considered antique or vintage. Finally, guaranteed auto or gap protection will pay for the amount of money owed on a lease or loan if it exceeds the value of the car.