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In this section, I’ll go through the various types of car insurance policies that you may come across. After I do so, I’ll share some of my own experiences with each type and explain why I think people should consider each type of policy.
When it comes to car insurance, a lot of people are confused about what is covered and what isn’t. This is caused by the fact that there are so many different policies and terms for all of them.
With the belief that this can be confusing for some readers, I’ve decided to break down the different types into their individual categories. For example, your own-damage car insurance might be described as “private car package policy” or “third party car insurance.” In other words, your own-damage policy covers your vehicle only in case you drive it into someone else’s car while you are driving your own. This is covered under third party auto insurance (grey area).
This is in contrast to a third party claim (also grey area) which would cover any damage done to another person’s property while you were driving your own or if you have been involved in an accident with someone else while driving someone else’s property.
I don’t know about you, but when I read about how much damage my new Prius did to my mother-in-law’s Rolls Royce Silver Cloud (which was parked in front of my house), it made me want to vomit! They told me that I had done more damage than they had ever seen in a single accident before! That would have been one heckuva claim!
And then when my mom went to pick up her Jeep Cherokee from the repair shop after she hit the guardrail on the road because she wasn’t paying attention, she was promised $1,000 worth of damages and not a penny less! She was really pissed off at me because she said she couldn’t afford to pay all those bills due and owing on her Jeep Jeep Cherokee which cost $25k or something like that…
So as long as we are talking about cars here (as opposed to trucks or SUVs), then private car package policies do indeed cover any damage done to your vehicle while you are driving it into someone else’s property (i.e., if someone bumps into yours while they’re driving theirs). But this isn’t paid by you until they
Table of Contents
Types of Car Insurance
Car insurance is complicated and confusing. You need to ask four questions:
Who covers me?
What do they cover?
How much will they cost me?
When will they kick in?
There’s a lot of variation here, so it’s not hard to get confused, but the key point is that these are all questions that you should be asking yourself before signing up for any kind of car insurance policy. It’s also really important to understand how the various policies affect your rate, so make sure you understand what their terms & conditions are (and what those terms mean).
The two main types of car insurance are: private car package (PCP) and stand-alone own-damage car policy (SODC). PCP usually means “no liability” (meaning you have no exposure to damage or theft), while SODC usually means “liability limited by policy limits + owner’s personal injury protection” (meaning your coverage automatically kicks in if you cause harm to somebody else).
The different types of car insurance policies are outlined below:
Most people think liabilities are the most important part of auto insurance coverage, but they aren’t — liability limits matter more than bodily injury or property damage per se . In fact, bodily injury is only one consideration when someone gets into a wreck . . . and even then only with regard to driving under the influence of alcohol or drugs . . . which means there’s more coverage for an accident than for DUI — if someone hits me with a truck I’ll be covered against bodily injury, but I won’t be covered against property damage from hitting a deer on the side of the road — there’s more protection for that than for DUI! Getting hit by a deer though is a lot more serious than driving under the influence though — it’s pretty much like getting hit by an asteroid!
Make sure you understand all these points when you’re looking at your options so that you can pick the right type of policy for your circumstances — even if you end up with all kinds of limitations on your coverage, as long as it’s legal or not prohibited , it doesn’t matter as long as you can afford it! If I have $10k in liability limits at my disposal , I’m going to buy a $70k SODC policy instead of $25k PCP one; because I want total protection regardless when I
Types of Liability Coverage
Liability insurance is a term used to describe the types of coverage people need in order to protect themselves from the financial consequences of their own actions. It is mandatory for drivers of vehicles with automatic transmission and for drivers behind the wheel of a boat without a life jacket. It is also mandatory for drivers of RVs.
While the exact language differs between different countries, there are some basic elements that apply everywhere (see more on policies below). Although liability coverage varies greatly depending on what you need it for, there are certain basic elements across all car insurance policies:
• You’re covered if your car is totaled or damaged in an accident resulting in personal injury, property damage or death.
• You’re covered if your car has been stolen.
• You’re covered if your car has been involved in an accident involving another vehicle where you were involved (e.g., when hit by another driver) but not injured or killed.
• The policy covers repairs and replacements at no additional cost to you and takes effect once you have paid off any deductible or have completed any waiting period — until you pay it off or meet your deductible, whichever comes first.
There are different types of liability insurance policies: private-car package insurance, own-damage car insurance and third-party liability coverage (for example, personal injury protection [PIP] coverage). All offer similar features: protection from claims by third parties; limited exclusions for personal injuries; minimum co-payments; discounts AND deductibles; unlimited lifetime limits on payments; etc.;
but their differences are much less important than the similarities between them. Private-car package policies typically offer a higher level of protection than do own-damage policies because they usually require that owners carry out repairs before replacing a damaged vehicle and they usually include optional extras such as roadside assistance and theft protection (which are very useful).
Own-damage policies often require that owners carry out repairs themselves before replacing a damaged vehicle which can save money compared to third party coverage because they don’t need to purchase extra equipment like equipment repair plans (which might be more expensive) and they don’t have to pay deductibles which can sometimes be more expensive than third party coverage because they must pay them up front.
Third party coverages typically have lower premiums as well as lower deductibles costs than private-car coverages but also have higher exclusions: in general, PIP coverages offer greater legal protections against claims from strangers than do third party coverages
Types of Collision Coverage
One of my favorite things to do is discuss car insurance with friends. I think it’s important to understand the different types and determine which will be most beneficial for you.
It is also important to recognize that there are many different types of car insurance policies: private car package, standalone own-damage, third party car, non-owner-damage.
Private Car Package Policy: This type of policy is designed for people who have a single owner vehicle and only use it for business or personal reasons. It provides coverage against damages or losses to the vehicle that occur while it’s in your possession.
Let’s say your friend asks you if they can borrow your car so they can get around town on their way home from work one day and your response is “Sure!” You then drive them home and head back out again to pick up some groceries, pay a bill or whatever else you need to get done before bedtime. For example, you might take them back out after school at night because they are going out with friends or because they got sick and need medicine.
You wouldn’t want this person spending any time in the same parking lot as you so the thought of that happening doesn’t cross your mind (it would be hilarious!). But if this person was driving alone too then that idea would immediately cross your mind and it would be only natural for both of you to take precautions: locked doors, etc…
This type of policy does not cover damage incurred from vandalism (i.e., vandalism on someone else’s property). It also doesn’t provide coverage for damage caused by an uninsured driver (i.e., a driver who drives uninsured). The private car package policy should only be used when it makes sense, particularly if the two individuals aren’t friends (for example if one person lives in a different state from the other).
This type of policy isn’t very useful since there are so many situations where a homeowner wouldn’t want anyone driving into his/her neighborhood without permission – including people who live in apartments (there really shouldn’t be anyone driving around without being invited by someone else – especially if there are kids there). However,
if a homeowner does allow their property to be used by another person then the homeowner will likely have liability coverage provided by their homeowners insurance carrier. Some homeowners may choose not to have liability protection at all even though they have homeowners insurance; but either way this coverage can provide peace of mind since these homes are unlikely to ever see an accident/loss situation arise
Types of Personal Injury Protection (PIP)
Personal injury protection (PIP) is, of course, the name given to a type of car insurance policy that provides compensation for injuries or damage to your vehicle in the event of an accident . Currently, there are three different types of PIP policies available:
• Private car package insurance policies (PCPIs) provide liability coverage on the insured’s own personal car, in addition to medical payments and collision coverage. These policies can be very expensive depending on where you live and how much you drive (higher premiums are usually paid by drivers driving larger cars).
• Own-damage car insurance policies (ODCIs) pay out if you cause damage to your own car while driving it yourself. These policies typically come with lower premiums than PCPI policies.
• Third party car insurance policies (TPCIs) insure private cars that have been registered with a third party (such as your employer), but do not have liability coverage on the insured’s own property. These policies typically come with higher premiums than both ODCI and PCPI policies.
Let’s take a closer look at each of these types:
Private Car Package Insurance Policies –
The most common form of PIP policy is the private car package insurance policy (PCPI). This policy comes with liability coverage on the insured’s own personal car, in addition to medical payments and collision coverage. Depending on how much they drive, customers will pay different amounts per accident depending on their premiums. The following table shows what people who purchase PCPIs typically pay for their premium each month:
As you can see from this table, most people pay much less per accident than they do for medical bills or collision damages; and if someone does cause damage to another person’s property but only does it themselves, then they will generally pay less for the value of other property than someone else would be responsible for paying for.
However, this is not an absolute – some people who drive far more often than others may find that all other things being equal their rates are higher because their rates are many times higher than anyone else’s rates when they don’t cause any accidents at all! Even if you don’t go so far as causing accidents yourself — say while running errands — it might still be worthwhile to purchase some form of PIP because there are usually discounts available which take into account how often you go shopping or buy groceries or rent cars
Conclusion
As you probably know, car insurance is a matter of life and death. It affects every family that owns a car and every individual that uses one. You need to determine which type of insurance will be most appropriate for you, as well as what kind of coverage it will provide.
Private Car Package Policy: This is the cheapest kind of insurance available, but its greatest drawback is the fact that it doesn’t cover damage to your own car. But if you have a private car and no other vehicles (e.g., an SUV), this should be sufficient for most people. If you have more than one vehicle, or are traveling in an organized group, consider getting a private car package policy instead.
Stand-Alone Own-Damage Policy: This type provides coverage for damage to your own car including bodily injury or property damage caused by any person outside your control (e.g., bad weather). If you have more than one vehicle, or are traveling in an organized group, consider getting a stand-alone policy instead.
Third Party Car Insurance: This type provides coverage against all risks associated with having an uninsured third party driver who might not want to pay for the full cost of their own insurance (e.g., bad weather). If you have more than one vehicle, or are traveling in an organized group, consider getting a third party policy instead.