Types of Insurances Required in the USA for Your Car

Surprisingly, car insurance is not compulsory in some of the USA states such as Iowa, Alabama, New Hampshire, Mississippi, Pennsylvania etc. These states are known to have financial responsibility laws that require you to post an approved self-insurance, or a cash deposit or a bond with the state for covering damages in case you are involved in any mishap or accident.

Motorists residing in states that have mandatory car insurance are supposed to present a proof of insurance while vehicle registration is done. They require carrying the proof of insurance along with them in their cars all the time. Buying car insurance in the USA could really be a complex and challenging affair than most other nations in the world. Insurance in the USA would be including some of the following kinds of cover.

Liability Insurance

Liability insurance is known to include bodily injury liability, which implies injuries caused by you to someone else. It also includes property damage liability that implies damage caused by you to someone else’s vehicles and property. In most US states Liability Motor Insurance seems to be mandatory. However, it may not necessarily be an unlimited liability. Each state sets responsibility limits for injury or death to only one individual, or injury or death to more than even one individual and also, property damage more than a certain amount.

In the event when after a mishap, your liability seems to be exceeding your insurance amount, you would be required to use your personal assets to pay off the damages, if required, until you are declared bankrupt. Lawsuits are known to involve millions of dollars and litigation lawyers are the richest legal sharks.

No-fault Insurance

District of Columbia and 25 US states follow some kind of PIP or Personal Injury Protection or No-fault Insurance Law. This implies that in case you meet with an accident, you could claim for the injury sustained, to a certain limit, directly from your own insurance company, instead, of going to the court and trying to establish the fact that the other driver was actually at fault. PIP is known to cover exclusively, bodily injuries and no vehicular damage. People insured under PIP insurance are known to receive their payments promptly from their very own insurance company.

PIP Medical Expenses Insurance

You could only buy PIP cover precisely for medical expenses. PIP medical expenses seem to be just right for paying the medical expenses for someone, who is injured while traveling in your vehicle irrespective of fault. Depending on the kind of policy you have chosen, PIP medical expenses should be covering your medical bills in case your family or you were traveling in another person’s vehicle or in case, someone’s car hits you while you are walking. In case, you are having comprehensive health insurance, PIP is not at all required then.

Comprehensive Insurance

Comprehensive insurance cover is effective in the case of loss of your car due to theft, fire, collisions with animals, vandalism, explosions, riots, falling objects, earthquakes, accidental glass breakage, floods, storms etc. It is not supposed to cover you against mishaps and accidents involving other objects or vehicles, for which you would be requiring collision cover.

Collision Insurance

Collision cover is meant for the damage to your own car/ vehicle, caused by you regardless of who was actually responsible for such damage. Comprehensive and collision cover are normally necessary for a car leasing or car loan company. You do not need to buy uninsured motorist insurance if you have collision insurance already.

Uninsured Motorist Insurance

Uninsured Motorist Insurance is best for safeguarding yourself against hit-and-run accidents and mishaps with uninsured motorists. Uninsured motorist cover seems to be normally equal to the minimum limits of financial responsibility, set by any state and it is mandatory in some states.

Under-insured Motorist Insurance

Under-insured Motorist Insurance is almost same as uninsured motorist cover. However, it covers you in case, some other motorist is responsible and accountable, but he has inadequate insurance for covering the damage to property or the injuries caused to you.

Miscellaneous Extra Insurance

Miscellaneous Extra Insurance should be bought to insure you against a wide spectrum of costs and that may include a rental car while your car is undergoing repair. It includes labor and towing costs if your car is involved in a breakdown or an accident.



Besides being the main writer and owner of Life and Experiences, she is also the co-founder of Ayanize Co.

Leave a Reply