Accidents happen, and there may come a time when you cause one. But you can spare yourself a lot of stress and financial turmoil with the proper auto insurance coverage. Several types of coverage can protect you and your vehicle if it's determined you're "at fault" in an accident.
Protection for your car
The first type, collision coverage, will pay the cost of repairs to your car if it collides with another vehicle or object, according to the National Association of Insurance Commissioners. Collision coverage is optional -- you must specify that you want add it to your policy.
The second type of coverage related to physical damage is called property damage liability insurance. This often is required as part of your state's minimum liability coverage and will pay for damage that you cause to property owned by someone else, including other vehicles, fences, mailboxes, lawns or trees.
Protection for you
In terms of injuries, the coverage required varies based on where you live. Some states have "no fault" auto insurance laws, meaning that, regardless of who caused the accident, injury claims are paid by the injured driver's own insurer. While these laws do not totally eliminate the risk of lawsuits, they do limit what kind of suit can be brought against you by the at-fault driver.
States not using the no-fault system rely on what is called a “tort" system. In these areas, optional medical payment coverage (often called MPC) covers medical costs for injuries to you or your passengers. Additionally, if your health plan has a deductible, medical payment coverage can pay a portion of it and, in some cases, cover the entire deductible, according to Allstate.
If you do live in no-fault state, you'll need personal injury protection (commonly called PIP). PIP is available in some tort states as well. This coverage can pay for your medical expenses, reimburse you for lost wages or, if you die, cover your funeral expenses, according to Allstate. As a general rule, purchase as much PIP as you can afford so that it can supplement your existing health insurance policy.
For further protection, consider bodily injury liability insurance, which protects the at-fault driver from claims that others involved in the accident might bring for pain and suffering, medical bills and lost income, according to the National Association of Insurance Commissioners.