January is one of the most popular times to buy or renew auto and homeowners insurance policies. But understanding the various types of coverage can be confusing, especially for first-time buyers. To celebrate the New Year, SelectQuote Auto & Home has put together this buyers guide to auto and homeowners insurance. While the definitions that follow will help you get your facts straight, its a good idea to consult your insurance agent about coverage type and policy details before you buy.
There are six basic types of auto insurance.
- Bodily Injury Liability. If you are at fault in an auto accident, your insurance provider will cover medical, rehabilitation and funeral expenses sustained by all injured passengers – including those not in your car. This plan will also pay your legal and settlement fees if a lawsuit occurs as the result of an accident that you caused.
- Property Damage Liability. Like bodily injury liability, this type of coverage kicks in when a car accident is your fault. Property damage liability covers parts and labor for car repairs, property inside the other partys vehicle, and any items that you may have hit. While this plan will also pay certain legal expenses, it does not cover damages to your own vehicle or property.
- Personal Injury Protection (PIP or No-Fault). Regardless of who is at fault in an auto accident, PIP covers most medical expenses – including hospital, rehabilitation and in-home assistance costs – along with lost wages and funeral expenses incurred by you and your passengers. Certain states require personal injury protection in addition to other types of coverage.
- Uninsured/Underinsured Motorist Protection. If you are hit by a driver with either no insurance or inadequate coverage, uninsured/underinsured motorist protection pays for the medical expenses, rehabilitation and funeral costs incurred by you and any other passengers in your vehicle. It also pays for the settlement of any lawsuits caused by an uninsured, underinsured or hit-and-run driver. Whereas certain states require this type of coverage, others consider it optional.
- Collision. If you are at fault in a car accident, collision coverage pays for any damages to your vehicle – up to and including your vehicles cost.
- Comprehensive. A comprehensive plan covers damage to your car resulting from natural disasters, theft, vandalism, and other unpredictable events for which you are not responsible.
There are four basic types of homeowners insurance.
- Dwelling. This type of coverage pays for damages resulting from events over which you have no control, including fire, wind, theft, and vandalism. It can also cover garages and other detached structures on your property.
- Contents. A contents plan reimburses you if personal items in your home – e.g., clothing, furniture and electronics – are damaged or destroyed by a covered cause of loss, such as a fire.
- Personal Liability. If you or a permanent resident of your household cause bodily injury to – or damage the property of – another person in your home, personal liability insurance will cover any legal fees and court awards that might transpire from such events. It also provides no-fault medical coverage if someone is injured on your property.
- Additional Living Expenses. This type of coverage will pay for your lodging, meals, animal boarding, and other expenses (up to a limit) in the event that you are unable to stay in your home due to a natural disaster or other unpredictable event over which you have no control.
Still have questions about auto and homeowners insurance? SelectQuote Auto & Home can help. Not only will your personal agent make sure you know exactly what type of coverage to buy, he or she will comparison shop up to 14 highly-rated insurance companies to find your best prices. Just call 1-888-236-8444 or visit SelectQuoteAutoandHome.com.