Types of Auto Insurance Coverage

While the details will always vary from one plan to another, these are the basic building blocks of any car insurance plan:


This is what you are required to have by law, if you own and operate a motor vehicle. It covers all of the other guy’s costs, in the event that you are involved in a car accident for which you are fount to be liable. Often liability insurance policies will have provisions that consider you not covered if you are driving drunk, if you are a new driver (specifically a teenager) driving after curfew and/or with friends in the car, or if the accident was the result of malicious intent, rather than a genuine accident.

There are usually varying degrees of protection, i.e. there are limits on how much the insurer will pay out in the event of an accident. It is usually advisable to protect yourself to the fullest, because anything the insurance won’t cover you will have to cover, out of pocket.


As opposed to property damage insurance, which covers the damage to the other guy’s car, this covers harm to the other guy’s health, or his passengers’ health. As with property damage insurance, there are provisions in the contract regarding situations under which the insurer will refuse to pay out, because of negligence on your part. Also, like property damage insurance, there are limits on how much will be paid out – so it is again wisest to cover yourself to the maximum, so that you don’t have to pay someone’s medical bills out of pocket.


These two types of insurance are for your benefit, in the event that you are involved in a crash in which the other guy is at fault, but his insurance policy does not cover all the damage to you car and/or health, and he is too poor to pay out of pocket. Many States require this as part of the minimum insurance package.


These two categories of coverage relate to accidents not involving another driver. Collision insurance covers damage that occurs if you accidentally collide with something other than a vehicle. Comprehensive insurance takes that a step further, and covers damage from fire, theft, hail, or any other cause besides your own negligence. The amount the insurance company will pay out is equal to the cost of the damage minus the deductible you chose.