Car Insurance Coverage Types - Collision, Liability, Comprehensive

Have you ever had “full coverage car insurance” on one of your vehicles? You might think that you have, but what exactly was meant by “full coverage?” For example did you have both collision and comprehensive? How about personal injury protection, uninsured motorist, or underinsured motorist insurance? Were the contents of your car insured against theft? What if your car were damaged in a parking lot, would it be covered?

If you don’t know the answers to these questions or even the meaning of some of these terms, then you’re like the vast majority of American drivers - all of whom are legally required to purchase auto insurance. Since you have to buy car insurance, it only makes sense to understand the basic types of coverage that are available to you.

Minimum Legal Requirements

All states require drivers to insure against damages that they may cause to other drivers’ property and persons. Most states do not require drivers to insure against damages they may cause to themselves.

Since insurance laws are determined at the state legislative level, the minimum legal requirements vary by state. In all 51 cases (including the District of Columbia), the minimums are expressed in three-part, split-form. For example, the minimum requirements for Alabama are expressed as 20/40/10. This means that drivers must insure for up to $20,000 of bodily damage per individual in an accident, $40,000 total bodily damage per accident, and $10,000 damage to automobiles and other property. You can find the minimum requirements for your state at this web site.

Comprehensive Coverage

Comprehensive insurance covers almost every type of non-traffic related damage. Accidents involving other cars or roadside signage are not covered by comprehensive, but instead are part of collision coverage.

Accidents in which the driver strikes an animal are covered by comprehensive insurance, not collision. At first this may seem counterintuitive, but insurance companies reason that you’ll have a much greater chance to avoid another car than dodging a deer running directly in front of you. In other words, comprehensive insurance tends to cover damages that you have virtually no control over.

Damage to a car as a result of theft (i.e. a broken window) is typically covered under comprehensive, but items stolen from inside of the car usually aren’t. Luckily, stolen items are normally covered by your renter’s or home insurance.

Other unavoidable situations, such as a tree branch falling and denting your hood, hail cracking your window, or your entire car being destroyed by fire, are covered by comprehensive insurance.

Collision Coverage

Collision coverage insures against damages to your car as a result of flipping over, or a collision with any object (including another car) other than an animal. Collision coverage usually costs about twice as much as comprehensive and almost always has a higher deductible. For these reasons, many drivers elect not to purchase collision insurance, which may or may not be a wise idea. If your car is four years old or newer, it is probably worth enough money to justify the added premiums. Then again, if your vehicle is that new, chances are you have a loan through a bank or other financial institution. In this case, you will be legally obligated to purchase collision insurance in order to protect the financial interest of the lender.

How To Find The Insurance Coverage That’s Right For You

When you are in the market for a new car, you don’t just go to one dealership. By the same token, you shouldn’t choose insurance agents or an agency without first shopping around. Car insurance is an incredibly competitive business, which is great for the consumer. If your hometown agent thinks you’re an unsophisticated buyer, he may not give you the best deal. Use resources like this web site to comparison shop and find the coverage that’s right for you, at the right price.