Your Auto Insurance Policy: 7 Optional Coverages You May Not Know About

By Chika

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Last Updated: July 5, 2022

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Auto insurance is required by law for almost all drivers in the United States.

It may:

  • protect you from financial ruin
  • pay for car repairs
  • cover medical expenses if you're involved in an accident

Most insurance firms, on the other hand, try to sell you the most complete full coverage policies with bundled coverages to protect you for anything. Some of these you may never need.

In most cases, you may not be taking advantage of optional coverage available to you which can provide you with added discounts for coverage. This article provides a quick overview of some of the options car insurance coverages you can opt for.

Ready to finance a new car? Read this next: Finance Your Car Loan at a Lower Cost - 4 Smart Ways to Get Ahead

 

 

7 Optional Auto Insurance Coverages You May Not Know About

1. Medical payments coverage (MPC)

Medical payments coverage (MPC) pays for injuries sustained by you and any passengers in your car at the time of the accident.

MPC only covers medical expenditures incurred as a result of car accidents; it does not cover lost income. If you are a pedestrian struck by a car, the coverage of your medical costs may extend to you.

There is a limit to your medical payments coverage. This is the most the insurance company will pay you for medical expenses.

This is usually a per-person restriction. So, if your MPC is $5,000, you have $5,000 in coverage per passenger in the car. Consult a certified insurance agent if you're unclear about how much medical payments coverage you'll need.

 

2. Personal injury protection (PIP)

No matter who caused the collision, personal injury protection (PIP) protects you and anybody riding in your car from injuries.

PIP, like medical payments coverage, may cover medical and rehabilitation costs, as well as burial costs.

If you are unable to fulfill responsibilities due to injuries experienced in an accident, PIP may pay work loss compensation or other non-medical expenditures such as childcare or home services.

PIP is optional depending on the state you reside in. If you live in a no-fault state, you may be required to carry this type of insurance. If you live in an at-fault state, you are not legally required to have PIP, but you may be able to purchase it for added protection. 

 

3. Gap insurance

If your automobile is damaged or stolen, and you owe more than the car's depreciated worth, gap insurance might help you pay down your loan.

Vehicles, particularly new ones, sometimes begin to lose value as soon as you drive them off the lot after buying or leasing them. Your loan amount may be more than the market value of your car due to depreciation.

Gap insurance, to put it simply, covers the difference between the depreciated value of your car and the amount owed on your loan. Gap insurance is frequently provided through your lender. It can also be acquired as an endorsement on your vehicle insurance policy from your insurance provider.

Your insurance provider, however, may set a restriction on how old a car may be to qualify for gap insurance.

Gap coverage, for example, may be available for vehicles that are brand new or up to two model years old. Gap insurance given by lenders is often far more expensive than gap insurance purchased from your motor insurer, according to the Triple-I.

 

4. New car replacement

Your auto insurance may provide you with new car replacement coverage if you have a vehicle that is one model year or newer. New automobiles depreciate rapidly. If you don't have this coverage, you might not be able to replace your vehicle with a new one if it's totaled.

The new car replacement endorsement is intended to cover the difference between the vehicle's value and the cost of purchasing a comparable new automobile.

 

5. Roadside assistance coverage

Roadside assistance coverage, sometimes called towing coverage or emergency roadside service pays for tows and service calls.

If your vehicle dies on the side of the road, or if you need to have a tire changed or gas brought to you, this coverage may pay the bill up to the coverage limit.

This is usually a dollar amount, but can be classified by the number of miles a service technician would have to drive to reach you.

 

6. Rental reimbursement coverage

To keep up with their regular schedule, everyone requires easy access to their automobile.

Rental reimbursement coverage will pay the cost of a rental automobile if you've been in an accident and your car is incapacitated. This ensures that your daily routine continues uninterrupted during this tough period.

This policy does not automatically cover your rental car while on vacation, contrary to common perception. However, if you have full coverage – comprehensive and collision — your vacation rental vehicle may be protected. Check with the insurance provider.

While your vehicle is not drivable due to a covered loss, rental car coverage pays for the cost of a rental automobile.

Two numbers separated by a slash are commonly used to signify coverage.

The first number represents the daily payment limit, while the second represents the overall payment limit. If you notice a 30/900 limit, that implies your employer will pay $30 per day for a rental automobile up to $900 total.

Most firms provide a range of coverage limitations from which you may select the one that best suits your needs.

Assume you require a car that can accommodate six persons. In this situation, you may wish to raise your car rental limit. If your vehicle is rendered undrivable, your insurance coverage will cover the cost of a bigger rental vehicle.

It's worth noting that many companies put a daily restriction on the number of days they'll pay your rental car charges. This is in order to urge you to get a replacement vehicle as soon as possible if yours is totaled.

 

7. Collision and comprehensive coverage

Other extra coverage types for your car, including collision and comprehensive, may be worth considering in addition to the necessary liability insurance, especially if it is newer or more valuable.

If you strike an object or another automobile, collision coverage compensates for the damage to your vehicle. Non-crash damage, such as weather and fire, is covered under comprehensive insurance. It also covers automobile theft and animal-related damage.

Auto insurers sometimes sell collision and comprehensive automobile insurance as a combination. Although these coverages are not required by law, they will almost certainly be if you have a loan or lease on your car.

If you're not sure whether coverage is best for you, contact an agent and get an estimate for both.

Photo by John-Mark Smith

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