Full coverage car insurance usually includes liability insurance, collision and comprehensive insurance. Here are the details of each coverage.
Car liability insurance
Car liability insurance pays for injuries and property damage you accidentally cause to others with your vehicle. For example, if you accidentally collide with another car, injuring the driver and damaging their car, your liability insurance pays for their medical bills and car repair costs, up to your policy limits. Liability coverage also covers court judgments or settlements and legal defense costs if you are sued in a car accident.
Car liability insurance appears as three numbers, such as 50/100/50. These numbers 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 of total bodily injury liability for an auto accident.
- 50 refers to $50,000 of property damage liability per accident.
Your state will have a minimum liability amount you must keep. Most state minimums are woefully inadequate, especially if you cause a serious or multi-car accident. It’s smart to buy higher limits, such as 100/300/100, to better protect you—and assets that could be taken from you in a lawsuit.
Car liability insurance only covers those you cause harm in a car accident. Liability insurance does not cover you, your passengers or your vehicle.
Comprehensive collision and coverage
Other key parts of a full coverage car insurance policy are collision and comprehensive coverage. They are separate coverages but are usually sold together. Collision and comprehensive coverage pays to repair or replace your vehicle if it is damaged in an accident or from non-collision incidents.
Collision coverage. Pays to repair or replace your car if it crashes into another vehicle or object, such as a fence or pole, regardless of fault. Collision insurance also pays for damage to your vehicle, such as accidental collapse of an embankment.
Comprehensive coverage. Pays to repair or replace your car if it’s stolen or damaged due to fire, vandalism, flood, hail, being hit by an animal, bad weather or falling objects.
For example, say your car slides on ice and hits a guardrail. Collision coverage would pay for the damage to your car (and your liability coverage would pay for the damaged guardrail).
If your car has been hit by hail and is full of noise, your comprehensive coverage would pay for repairs.
Both collision and comprehensive coverage have a deductible, such as $500 or $1,000. Deductible is the amount deducted from your claim check. For example, if accident repairs cost $1,500 and you have a $500 deductible, your insurance claim payment will be $1,000.
Also, keep in mind that collision and comprehensive pay the depreciated value of your vehicle when you make a claim. This means that the maximum damage payment for collision and comprehensive insurance is the value of your car, immediately before the accident or damage, if totaled, minus your deductible.
Collision and comprehensive coverage are not required by any state, but if your car has a lease or loan on it, your lender will likely mandate that you carry both coverages.
What other coverages can be included in a comprehensive coverage policy?
Some states mandate other coverages to be part of your car insurance policy. Common coverages required by the state include uninsured motorist coverage, personal injury protection coverage, and medical payments.
Uninsured motorist coverage
Uninsured motorist coverage helps pay for injuries to you and your passengers and for damage to your car when the at-fault driver is uninsured. Normally, if you are in a car accident where the other driver is at fault, their bodily injury liability coverage would cover you and your passengers’ medical bills. However, if the person is driving without insurance, uninsured motorist coverage would help cover these medical expenses.
Uninsured motorist coverage is sold in limits that match your liability coverage. Some states require uninsured motorist coverage, while in others it is optional.
Personal 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 child care, if you are incapacitated because of your injuries. Some states require PIP, while in others, it is optional or not offered.
Medical Payments Coverage (MedPay) also helps pay medical bills related to a car accident for you and your passengers, regardless of fault. Required in some states, but optional in most, if offered at all.
To build your full coverage car insurance policy even further, there are other types of car insurance coverage that you can add on. Optional covers that give you extra protection include rental reimbursement, roadside assistance and gap insurance.