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Auto insurance comes as a package of different coverage options. Your package of coverage options needs to meet your state’s minimum auto insurance requirements for each type of coverage. And each state has different minimums that need to be met.

The six basic components of an auto insurance policy:

  • Bodily Injury Liability: Bodily injury coverage is required by most states. It provides coverage for any injuries you cause to someone else. It only takes the blink of an eye for a car accident to happen. And even if it absolutely, positively wasn’t your fault…a court might not agree. And that means you have to pay for the damages and the injuries. But if you have an auto liability policy, your auto insurance company pays the damages.
  • Property Damage Liability: This is another coverage type that will be required by most states. It covers any damage you cause to someone’s property.
  • Personal Injury Protection: Better known as PIP Insurance. PIP provides for the treatment of injuries to the driver and passengers of the policyholder’s vehicle.
  • Collision Coverage: Collision is typically an optional auto policy component that covers any damage to your vehicle that’s the result of a collision.
  • Comprehensive Coverage: This coverage will protect you in case of any damage to your vehicle that didn’t involve a collision. This includes theft, fire, and vandalism.
  • Uninsured Motorist Coverage: This offers you protection if you’re injured in a collision with a driver who’s either uninsured or insufficiently insured.

There are also a number of supplemental auto insurance coverage options. The three rider types listed below are available as add-on premium items:

  • Rental Reimbursement Coverage: This is a fairly common rider that will cover you if you need to rent a vehicle to replace yours if it’s damaged or stolen.
  • Towing and Labor Coverage: This covers your out-of-pocket costs in case of a flat tire or if your car breaks down.
  • Gap Auto Insurance Coverage: Better known as an “Umbrella Rider,” a gap insurance add-on will pay out the difference between the actual cash value of your car and whatever amount is left on your auto loan if your car is totaled in an accident.

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