Auto insurance is a legal requirement for all drivers in the United States, being regulated at the state level. In addition to state requirements, many drivers who finance or lease a car are also subject to lender-required auto insurance coverages. Here are some of the most commonly required auto coverages. 

Liability Coverage

Liability coverage is the most basic type of auto insurance coverage that drivers are required to carry. It covers the cost of any damage or injuries that a driver may cause to another person or their property while operating a vehicle. 

This coverage is typically divided into two parts: bodily injury liability and property damage liability. Bodily injury liability coverage will pay for any medical expenses or lost wages that the other party may incur as a result of an accident. Property damage liability coverage will pay for any damage to the other party's property.

States generally require both bodily injury liability and property damage liability coverage, although they might have different minimum amounts for the two protections.

Uninsured and Underinsured Motorist Coverage

Uninsured and underinsured motorist coverage is another type of coverage that drivers may choose to carry. It will provide protection for a driver and their passengers in the event of an accident with an uninsured or underinsured motorist. The coverage may pay for medical expenses and any damage to the driver's vehicle.

Uninsured and underinsured motorist coverage is normally required by states. How much must be purchased depends on the state.

Collision Insurance

Collision insurance is often required when drivers finance or lease their vehicles. Collision covers the cost of any damage to a driver's own vehicle that is caused by a collision with another vehicle. This coverage will pay for repairs or the replacement of the driver's vehicle, regardless of who is at fault for the accident.

Comprehensive Insurance

Comprehensive insurance is usually also required for financed and leased vehicles. It covers the cost of any damage to a driver's own vehicle that is caused by something other than a collision, such as theft, vandalism, or natural disasters. This coverage will pay for repairs or the replacement of the driver's vehicle.

Gap Coverage

Gap coverage applies to the difference between the amount you owe on a vehicle, and the vehicle's actual cash value in case of total loss or theft. Comprehensive and collision usually only protect up to the actual cash value, so this fills the gap. Gap coverage is often required when there's an outstanding loan on a vehicle.

For more information, contact a local auto insurance company, such as Full Service Insurance Agency of Wisconsin LLC.