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What’s the Difference Between Liability, Collision, and Comprehensive Auto Coverage?

It doesn’t matter what the type of car you own, the law will require you to purchase auto insurance. Deciding what type of car insurance to get can be difficult because of the options available. Some countries or states require a minimum amount of insurance coverage. But, if you wanted to get more than the minimum, you will have to determine which type of insurance to get. To help you choose the right insurance policy, here are the main differences between the liability, collision, and comprehensive insurance coverage.

Liability Insurance

Liability is the minimum requirement you can have for auto insurance coverage. Many people only get liability coverage if they live in a state that does not specify the type of insurance coverage they need to have. Liability coverage is divided into two categories: bodily injury and property damage. Bodily injury coverage provides protection should the accident involve the injury or death of a person. The insurance covers the costs of the other driver’s out-of-pocket expenses like medical bills and loss of income. Liability coverage can also pay for your defense if the accident causes a lawsuit. Liability coverage does not pay for any damage done to your car.

 

Property damage liability will protect you should your car cause damage to someone else’s property. This type of liability also provides a legal defense should the accident cause a lawsuit. Property liability will cover the costs of repairing damaged buildings and the vehicle of the other parties involved in an accident. Your coverage should be enough to cover the costs of damage your car could do to someone else’s property or car. You should discuss the type of liability coverage you should have with your insurance broker. The amount of liability coverage you need will vary from one state to the next.

A liability-only policy is ideal in the following circumstances:

You have an older car that you wouldn’t repair if it were involved in an accident. You may want to save the money and get liability coverage.

You might want to consider liability coverage for a teen driver. Most teens drive vehicles that are not very expensive. It may be cheaper to insure them in this type of vehicle with liability coverage. It is important to keep in mind that teenagers are inexperienced drivers and tend to get involved in more car accidents.

Collision Coverage

Collision insurance will cover the costs of a repair or replacement of your car should it be involved in a car accident. If you are financing or leasing your vehicle, your lender will probably require you to have collision insurance. Anyone who owns their car can choose to add collision insurance to their insurance policy.

Collision insurance typically covers the replacement or repair of your vehicle in the following situations:

  • A collision with an object
  • Single-car accidents
  • Collision with another vehicle

Collision insurance does not provide coverage if you damage your vehicle in a non-driving incident. This type of insurance also doesn’t provide coverage if you damage another person’s vehicle. It also does not cover medical bills.

There are several benefits to having collision coverage. With collision coverage, you only pay for repairs above the cost of your deductible. A deductible is the amount of money you will have to pay to cover the costs of repairing your damaged car. The higher your deductible, the more money you have to pay to get your car repaired. You are also covered for the loss of your vehicle in the event that it is totaled.

Comprehensive Insurance Coverage

Comprehensive coverage provides more coverage than liability insurance. It includes liability coverage but also covers damage done to other vehicles and your own as a result of a car accident. Sometimes it will cover the cost of your vehicle if you are still trying to pay it off. It will also help you get into a new vehicle. Some policies may include coverage for damage that results from natural causes, like a storm. This type of policy usually includes a deductible. The cost for comprehensive insurance is higher than liability coverage. However, the additional cost of coverage is worth it.

Comprehensive insurance is a good choice if you owe a substantial amount of money on your car. Or, if you don’t have an emergency fund lying around to access should you be involved in a car accident. If you have an old car, you may want stick to liability coverage. The amount of comprehensive insurance coverage you can get is limited to the market value of your vehicle. The policy may not cover any damage that is more than the value of the vehicle.

Buying the right type of car insurance can be difficult. However, if you understand the different kinds of coverage, you will make the right decision. Auto insurance is mandatory in the majority of states, so it’s important to choose a policy that works with your lifestyle and budget.

References:

Georgia’s Finest | Types of Car Insurances

The Balance | Importance of Car Insurance

ValuePenguin | Property Damage Liability