Finding the right insurance policy isn’t just about financial coverage for your car or home but also protecting the people you love. Understanding the various types of auto and home insurance can seem intimidating, which is why we’ve put together an overview of the most common coverages to help you review the basics before buying. In this article, we’ll list the different types of home and auto insurance so you can understand your options and find the policies that are right for you.
Six Types of Auto Insurance
There are six primary types of auto insurance coverage, each serving different purposes and offering varying levels of protection. Depending on your vehicle, driving frequency, and the coverage you’re looking for, you’ll want to consider what type of policy is the right fit for you. Here’s a look at the six types of car insurance:
1. Bodily Injury Liability
Bodily injury liability coverage is a component of auto insurance that provides you with financial protection in the event that you’re found responsible for causing injuries to others in an accident. This coverage helps pay for the injured party's medical expenses, lost income, and legal fees, among other related costs. Bodily injury liability coverage typically includes payments for medical treatments, hospital bills, rehabilitation, and, in some cases, long-term care for the injured parties.
2. Property Damage Liability
Property damage liability coverage kicks in when you’re at fault for a car accident. This typically covers parts and labor for car repairs, property inside the other party’s vehicle, and/or any items you may have damaged during the accident. While this coverage type will also pay certain legal expenses, it does not cover damages to your own vehicle or property.
3. Personal Injury Protection
Personal injury protection (PIP) covers most medical expenses—including hospital, rehabilitation, and in-home assistance costs—along with lost wages and funeral expenses incurred by you and/or your passengers. PIP is often referred to as "no-fault" coverage because it is designed to provide benefits without the need to establish fault in the accident.
4. Uninsured/Underinsured Motorist Protection
If you are hit by a driver with either zero or inadequate coverage, uninsured/underinsured motorist protection pays for the medical expenses, rehabilitation, and funeral costs incurred by you and/or any other passengers in your vehicle. It can also pay for the settlement of any lawsuits caused by an uninsured, underinsured, or hit-and-run driver.
5. Collision
Collision coverage is a component of auto insurance that helps pay for the repair or replacement of your vehicle if it’s damaged in a collision with another vehicle or object, or if the insured vehicle overturns. This coverage is designed to protect your car in the event of an accident, regardless of who’s at fault. In the event of a covered collision, the insurance company will typically pay for the cost of repairing the insured vehicle up to its actual cash value (ACV) or for the car’s replacement if the cost of repair exceeds its ACV.
6. Comprehensive
Comprehensive auto insurance coverage is a type of insurance that provides protection for your vehicle against damage or loss that’s not the result of a collision with another vehicle or object. This coverage is designed to protect the insured vehicle from a wide range of non-collision incidents. This means that a comprehensive plan covers damage to your car from an event that’s out of your control, such as a natural disaster, theft, vandalism, or other unpredictable events.
Six Types of Home Insurance
Home insurance typically consists of six primary types of coverage, each serving different purposes to protect your home, belongings, and finances. Coverage and cost vary from state to state, but the six primary types of home insurance coverage include:
1. Dwelling
Dwelling coverage is the core component of a home insurance policy. It protects the physical structure of your home, including the walls, roof, floors, built-in appliances, and any attached structures like a garage or deck. This coverage provides financial protection against perils such as fire, wind, hail, lightning, and other covered hazards. In the event of damage or destruction to your home, dwelling coverage helps cover the costs of repair or rebuilding up to the policy's limits.
2. Personal Liability
Personal liability coverage offers protection in situations where you are found legally responsible for injuries to other people or damage to their property. This coverage can help cover legal expenses, medical bills, and settlement costs if a lawsuit arises from an incident that occurs on your property.
3. Personal Property
Personal property coverage safeguards your belongings inside the home, such as furniture, clothing, electronics, and other personal items. If these items are damaged, destroyed, or stolen due to covered perils, this coverage helps reimburse you for the loss. It's important to review the policy to understand the limits and exclusions related to specific items, such as jewelry or high-value electronics.
4. Additional Living Expenses
This portion of coverage can pay for your lodging, meals, animal boarding, and other expenses in the event that you are unable to stay in your home due to a natural disaster or other unpredictable events over which you have no control.
There are many other additional coverages, like umbrella insurance, which can be added to these policies. Umbrella insurance—also referred to as excess liability insurance—protects you and your assets when you’ve exhausted the limits of your home insurance.
5. Guest Medical Protection
Guest medical protection, also known as guest medical coverage, is a component of a standard homeowners insurance policy. This coverage is designed to protect you in the event that a guest is injured while on your property, regardless of who’s at fault. If a guest sustains minor injuries, such as a sprained ankle or a cut, this type of coverage can help cover their medical expenses without the need for a liability claim or lawsuit.
6. Loss of Use
Loss of use coverage, also known as additional living expenses (ALE) coverage, is a component of a standard homeowners insurance policy that provides protection for additional costs if you’re temporarily unable to live in your home due to a covered loss. If your home becomes uninhabitable due to damage from a covered event, such as a fire or severe storm, loss of use coverage can help pay for expenses related to living elsewhere while your house is being repaired or rebuilt.
Importance of Homeowners Insurance and Car Insurance Coverage
There’s a lot to know when it comes to auto and home insurance. Whether you’re looking for a cost-friendly premium or the maximum amount of coverage, you have several options to consider. That’s why we’ve added some additional resources to help you find the policies you need:
Find the Home and Auto Coverage You Need with SelectQuote
It’s important to make sure your most valuable assets are protected with insurance coverage that works with your budget. Whether this is your first time shopping for coverage or if life changes have you evaluating your current policies, we can help you find the right plan for your current situation. We work with some of the most trusted home and auto insurance carriers and can find you opportunities to save both time and money such as combining or bundling policies. We’ll help you find reliable and affordable auto and home insurance to provide all the protection you need at a price you can afford.
