Different Types of Car Insurance Policies

Each car insurance policy offers a different type of coverage. As such, car insurance policies vary in cost. The type of car insurance you will typically purchase is basically determined by coverage. Coverage is the extent of liability an insurance provider will cover for you in exchange for a certain sum of money.

 

The basic types

Full comprehensive auto insurance - The most common type is the full comprehensive auto insurance. It insures motorists from damages or loss from all sorts of events: collision, fire, vandalism, natural disasters, and theft. This insurance will protect you if you meet an accident with an uninsured motorist. Your insurance provider will still cover you even if it is the uninsured motorist's fault. However, this policy does not guarantee you a 100 percent protection. There are conditions that can make your claim invalid. These conditions vary from company to company. The inclusion of such conditions is a measure insurance providers take to guard themselves against fraudulent losses. Since this type of car insurance policy is the most extensive, it is naturally the most expensive.

Collision insurance - The second most common type of insurance policy is the collision insurance. It pays off your car repair should you meet an accident, and it is found out that you are at fault. But this does not cover the expenses for injured or deceased parties. A bodily injury liability will cover you if you cause injury or death to other people during an accident. This type of policy may fall into a broader policy.

Third-party liability insurance - The third-party policy covers your expenses when someone makes claims against you. But unlike bodily injury liability, the third-party policy also covers the expenses other people claim for the repair of their vehicle. There are other types of insurance, but they fall basically into these categories.