What Does Car Insurance Cover?

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There are several insurance covers for a single car policy. Some are mandatory for all states while others are optional. Before deciding what coverage you will need, it’s vital to do a little research on the different types of coverage available for a car insurance policy. Thankfully, we have done the research for you. The article provides an overview of the different types of insurance coverage you can get in a car insurance policy with American Insurance.

But remember to undertake a policy that provides cover for you and your household, as well as anyone you would love to have access to the policy.

Liability Insurance

This is one of the most important policies of car insurance coverage. It provides indemnity for injuries and damages sustained by others involved in the collusion or accident. Almost all states provide cover in this aspect. While property damage provides compensation for damaged property or repairs of other car involved in the accident, bodily injuries coverage takes care of injuries sustained by the third party.

There are different levels of liability, which depends on the type of policy you want and what the insurance company can cover. However, as stated earlier, all states, except Hampshire, have a minimum level of coverage any policy holder can undertake for bodily injuries and property damage.  Insurance companies will only pay up to the minimum amount stated in the policy, and any other excess will not be covered in the policy.


Medical payment or personal injury protection

This is the cover provided to the policy holder for injuries sustained during the accident. It provides cover only to the policy holder, except they want to include liability insurance to the coverage. Medical coverage (Medpay) or injury protection (PIP) is available in almost all insurance companies with car insurance coverage. They indemnify by paying for medical expenses incurred through injuries. They also take care of any expenses for burial.   

Remember that the policy for this coverage works differently in each state, so it’s important to check whether there are limits or exceptions in your state before choosing a policy. Arguments or disagreements on personal injuries or medical expenses coverage is as a result of lack of understanding by the policy holder on the terms of contract and the coverage limits.

Underinsured or uninsured car coverage

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This is an additional coverage you can take for certain situations. Some drivers on the road are not insured. When an accident happens and the driver is at fault, he or she is expected to pay for the damage and injuries sustained by you. But they may not be able to do so if they are not insured or if they don’t have enough money to take care of the bills. In this case, adding uninsured policy on your insurance coverage will help out here.

Also, the driver may be insured but the insurance coverage may have certain limitations on liability insurance. You can take up underinsured coverage to take care of the remaining expenses that exceed the driver’s insurance coverage. This type of policy is optional, but there are some situations when it will come in handy.

Comprehensive and Collusion insurance

Liability insurance provides coverage to repair or reimburse for damage caused to other people’s cars. But comprehensive and collusion insurance provides cover for damage done to your car during accidents. If the car is slightly damaged, the insurance company will pay for the repair cost of the car. But if it’s damaged completely, they will provide compensation and reimburse the policy holder the currant value of the damaged car.

Although the two insurance covers have their differences, they are usually covered under one policy. While comprehensive insurance provides coverage if your car is damaged or stolen, collusion insurance provides indemnity if your car is involved in collusion with another car or an object.

Gap Insurance

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This type of insurance is undertaken if you are leasing the car. If the car is completely damaged, the company will pay the amount for the current value of the car after subtracting the amount you lease the car.  Gap insurance is usually provided by the leasing company, and the insurance premium is added to the leasing amount. You can equally purchase this type of insurance if you take a car loan. It becomes vital and helpful if the amount of the insurance is lower than what you are expected to pay on the car loan.

Other additional coverage

There are other extras you can include in your car insurance, depending on what you need and your particular situation. However, you are required to have a comprehensive car insurance policy before you can add these extras to your policy. Other additional covers you can add to your policy include full glass coverage, tower assistance or roadside assistance coverage, as well as rental reimbursement coverage.


Overall, car insurance is mandatory for all drivers on the road and you need to understand the difference between the policies before selecting the right one for your needs. With the right information and the proper knowledge of car insurance policies in your state, you can select the most ideal motor insurance coverage for you and your household.


Disclaimer: This content does not necessarily represent the views of IWB.




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