Comprehensive auto insurance normally includes liability coverage, collision coverage, and comprehensive coverage. Here are the details of each cover.
Motor vehicle liability insurance
Motor vehicle liability insurance covers injuries and property damage that you accidentally cause to others with your vehicle. For example, if you accidentally hit another car, injuring the driver and damaging their car, your liability insurance pays for their medical expenses and the cost of repairing their car, up to your policy limits. Liability insurance also covers court judgments or settlements and legal defense costs if you are sued for a car accident.
Liability auto insurance is displayed as three numbers, such as 50/100/50. These figures represent the maximum payment limit for each part of your liability coverage.
50/100/50 translates to:
- 50 refers to $50,000 of bodily injury liability per person injured in an accident.
- 100 refers to $100,000 total bodily injury liability for a car accident.
- 50 refers to $50,000 property damage liability per accident.
Your state will have a minimum amount of liability that you must carry. Most state minimums are woefully inadequate, especially if you cause a serious or multiple-car accident. It’s a good idea to buy higher limits, such as 100/300/100, to better protect yourself and assets that could be taken from you in a lawsuit.
Automobile liability insurance only covers those you cause damage to in a car accident. Liability insurance does not cover you, your passengers or your vehicle.
Collision and full coverage
The other main components of a full coverage auto insurance policy are collision and full coverage. They are separate covers, but they are usually sold together. Collision and Comprehensive Coverage pays to repair or replace your vehicle if it is damaged in an accident or non-collision related incident.
Collision coverage. Pays to repair or replace your car if it collides with another vehicle or object, such as a fence or pole, regardless of fault. Collision insurance also pays for the rollover of your vehicle, such as accidentally rolling down an embankment.
Full coverage. Pays to repair or replace your car if it’s stolen or damaged due to fire, vandalism, flood, hail, animal impact, extreme weather or crash. objects.
For example, suppose your car slips on ice and hits a guardrail. Collision insurance would pay for damage to your car (and your liability insurance would pay for the damaged guardrail).
If your car is hailed and riddled with blows, your comprehensive coverage will pay for the repairs.
Collision coverage and comprehensive coverage both have a deductible, such as $500 or $1,000. The deductible is the amount deducted from your claim check. For example, if repairs from an accident cost $1,500 and you have a deductible of $500, your insurance claim payment will be $1,000.
Also, keep in mind that Collision and All Perils pays for the depreciated value of your vehicle when you file a claim. This means that the maximum compensation amount for Collision and All Perils coverage is the value of your car just before the accident or damage, if total, minus your deductible.
Collision and comprehensive coverage aren’t required by any state, but if your car has a lease or loan, your lender will likely require you to purchase both coverages.
What other coverages can be included in a full coverage policy?
Some states require other coverage to be part of your auto insurance policy. Common coverages required by the state include uninsured motorist coverage, bodily injury protection coverage, and medical payments.
Uninsured Motorist Coverage
Uninsured motorist coverage helps pay for injuries to you and your passengers and damage to your car when the at-fault driver is uninsured. Normally, if you are involved in a car accident where the other driver is at fault, their liability coverage will cover you and your passengers’ medical expenses. However, if the person is driving without insurance, uninsured motorist coverage would help cover these medical expenses.
Uninsured motorist coverage is sold within limits that match your liability coverage. Some states require coverage for uninsured motorists, while in others it is optional.
Bodily Injury Protection and Medical Payments
Personal Injury Protection (PIP) coverage helps cover medical expenses for you and your passengers, regardless of who caused the car accident. PIP insurance also pays for lost wages and replacement services, such as childcare if you are unable to due to your injuries. Some states require PIP, while in others it is optional or not offered.
Medical Payments Coverage (MedPay) also helps pay medical bills associated with a car accident for you and your passengers, regardless of fault. It is mandatory in a few states, but optional in most, if at all.
To expand your full-coverage auto insurance policy even further, there are other types of auto insurance coverages you can add. Optional coverages that give you additional protection include Rental Reimbursement, Roadside Assistance and Gap Insurance.