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Explaining Common Forms of Car Insurance

Published on November 25th, 2020

Chances are if you’re looking for Chicago Auto Insurance, you’ve probably heard the terms Liability Insurance’ and ‘Collision Insurance’ thrown around a bit. These are two of the more common forms of auto insurance available, but they’re far from the only types worth knowing when you’re shopping for a new car insurance policy. Today, we’ll be breaking down some of the most common forms of car insurance so that you have a better idea of what will work for you.

Liability Insurance

Liability insurance is mandatory in 49 out of 50 states in the U.S., with New Hampshire being the only hold out. This type of insurance covers any damage done to other people and their property during a collision. Most policies provide both bodily injury insurance and property damage coverage.

Collision Insurance

This type of insurance is not mandatory, but often very helpful to have in the case of an accident. Collision insurance protects your own vehicle after an accident, regardless of whether or not you were at fault. Those who are leasing their car or took out a loan to purchase it are often required to buy this type of insurance.

Comprehensive Insurance

Comprehensive insurance is designed to protect your vehicle from damage caused by non-collision events. This includes damage caused by theft, falling objects, or natural disasters like fires or flooding. Similar to collision insurance, if you are leasing or repaying a car loan, you may be contractually required to hold this kind of policy.

Uninsured and Underinsured Motorist Coverage

What happens if you have an accident with an uninsured or underinsured motorist? While the specifics may vary depending on the details of the accident, having uninsured and/or underinsured motorist coverage can help ensure that you won’t personally have to pay for everything out of pocket. These types of insurance may be rolled into a different policy or sold separately, generally at a low cost.

Personal Injury Protection (‘No-Fault’ Insurance)

If you’re injured in a car accident, one of the last things you need is a mountain of medical bills for which you are solely responsible for. Personal Injury Protection (PIP), also known as no-fault insurance, is designed to help cover medical bills regardless of who is at fault in a car accident. Depending on details of your individual policy, no-fault insurance can even cover you while you’re in another person’s car, walking on the street, or riding your bike. Some PIP plans may cover lost wages or even funeral costs in extreme scenarios.

Certain states make PIP a mandatory car insurance requirement. For others, PIP is simply an additional option offered by car insurers. When it comes to Illinois law, PIP is not mandatory.

Medical Payments Coverage (‘MedPay’)

Similar to no-fault insurance, Medical Payments Coverage (also referred to as ‘MedPay’) is designed to help offset the burden of medical costs after an accident. MedPay is generally more narrow in scope compared to PIP, focused on the medical expenses for the driver and their passengers.

What Insurance(s) Do I Actually Need?

Knowing that there are many different types of auto insurance may have you wondering what type(s) will work best for you. When determining what kind of policy you should look for, consider these three factors:

  1. Legal factors. It’s important to stay compliant with local laws regarding vehicle auto insurance. If you are ever pulled over or are part of a collision, being uninsured or underinsured can result in serious legal consequences.
  2. Financial factors. While your budget may have you searching for the cheapest plan possible, try to assess your readiness for a collision. If you select the bare-minimum insurance, you may later be on the hook to replace your car or pay for medical bills.
  3. Lender requirements. Did you lease your car? Are you still paying it off? There may be a stipulation in your contract that requires you to hold a certain kind of insurance. Read through the fine print of your agreement before buying a car insurance policy.

Minimum Auto Insurance Coverage in Illinois

When it comes to Chicago auto insurance policies, it’s important to make sure that you are compliant with local laws. It is mandatory that Illinois drivers acquire at least two forms of car insurance listed above: uninsured motorist coverage and liability coverage. Minimum requirements for Illinois liability coverage include:

  • $25,000 for bodily injury to one person
  • $50,000 for bodily injury to multiple people
  • $20,000 for property damage

Find Affordable Chicago Auto Insurance Policies

Are you in the market for a new car insurance policy in Illinois? Accurate Auto Insurance helps customers stay fully compliant with state and local laws by offering affordable car insurance quotes. We offer auto insurance, motorcycle insurance, SR-22 insurance, and Indiana SR-50 insurance. Apply on our website, give us a call, or visit any of our locations for help.

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