What Are the Types of Car Insurance Policies?

Car insurance protects you against auto-related damages.young red-haired woman with her broken car. image by ta_samaya from Fotolia.com

Car insurance is a necessity for every driver and car owner. It protects them and their families from loss and damages related to automotive accidents. There are several different types of car insurance to fit every person's needs and lifestyle. Understanding these different types of insurance is important. It will enable car insurance buyers to choose the plan that is best for them.

Bodily Injury Liability

Bodily injury liability covers injury that you might cause to someone else in a car accident. This means that the car insurance company pays for the expenses related to any bodily injury--or sometimes even death--caused to the other party involved in the accident. The amount they pay depends on your coverage plan and its limits. Bodily injury liability insurance is a must for drivers.

Property damage liability is much like bodily damage liability, except it covers damages caused to a person's property instead of to his body. A person's property usually refers to his car, but could also include his home, other buildings, fences, lampposts, mailboxes and so on. Property damage liability is mandatory in most states.

Most car accidents happen in the form of a collision. Collision coverage protects you from paying the costs of damages to your car in the event of a collision. Everyone with a car would benefit from having collision insurance, but especially someone with a brand-new car.

Comprehensive car insurance covers many things. It is often called the "other than collision" coverage. It covers all kinds of damage to your car such as from hail, fire, flood, explosion, earthquake and other such occurrences. It usually also offers some coverage of medical expenses for someone injured in an accident--or even funeral expenses. Since comprehensive coverage covers so much, it is a smart buy.