- Liability coverage pays for injuries and damage you cause to others, and almost every state requires it.
- Collision covers your own car after a crash; comprehensive covers theft, weather, fire, animals and similar events.
- "Full coverage" is not an official term. It usually means liability plus collision and comprehensive.
- State minimum limits are often low. Many drivers choose higher limits to protect their savings and income.
Liability coverage: protecting other people
Liability is the core of an auto policy and the part most states require by law. It pays for harm you cause to others when you are at fault. It has two parts:
- Bodily injury liability pays for other people's medical bills, lost wages and related costs, as well as your legal defense if you are sued.
- Property damage liability pays to repair or replace other people's property, most often their car, but also fences, buildings or signs.
Limits are often written as three numbers, such as 50/100/50. That means up to $50,000 for injuries to one person, up to $100,000 for injuries in a single accident, and up to $50,000 for property damage. If a serious accident costs more than your limits, you can be personally responsible for the difference. That is why many people choose limits well above the state minimum, especially if they have a home, savings or a good income to protect.
Collision and comprehensive: protecting your car
Liability does not pay to fix your own vehicle. For that, you need physical damage coverage:
- Collision pays to repair or replace your car after it hits another vehicle or an object, or rolls over, regardless of who is at fault.
- Comprehensive (sometimes called "other than collision") pays for damage from theft, vandalism, fire, falling objects, hail, flooding, and hitting an animal such as a deer. It often covers broken glass too.
Both coverages pay up to the car's actual cash value, which is its market value at the time of the loss, minus your deductible. They are optional under state law, but if you lease or finance, your lender will almost certainly require them.
How deductibles work
A deductible is the amount you pay toward a collision or comprehensive claim before insurance pays the rest. If repairs cost $3,000 and your deductible is $500, the insurer pays $2,500.
Choosing a higher deductible usually lowers your premium, because you are taking on more of the small losses yourself. The right number is the one you could pay tomorrow without real hardship. If a $1,000 surprise would be a problem, a lower deductible may be worth the higher premium. Liability coverage does not have a deductible.
Other coverages worth knowing
- Uninsured and underinsured motorist (UM/UIM). Pays for your injuries, and in some states your car damage, when the at-fault driver has no insurance or not enough. Some states require it; in others it is optional and well worth considering.
- Personal injury protection (PIP). Pays medical costs and sometimes lost wages for you and your passengers no matter who caused the crash. It is required in "no-fault" states.
- Medical payments (MedPay). A smaller, simpler version of PIP available in many states.
- Gap coverage. If your car is totaled while you owe more on the loan or lease than it is worth, gap coverage can pay the difference.
- Rental reimbursement. Helps pay for a rental car while yours is being repaired after a covered claim.
- Roadside assistance. Towing, jump-starts, lockouts and flat tires. Check whether you already have this through a vehicle warranty or another membership.
What "full coverage" really means
You will hear the phrase "full coverage" often, but it is not a defined product. It usually means a policy with liability, collision and comprehensive, sometimes with UM/UIM. It does not mean everything is covered. Routine maintenance, mechanical breakdowns and wear and tear are not covered by any standard auto policy, and every coverage has limits and exclusions. When comparing prices, look at the actual coverages and limits listed rather than the label.
How to decide how much you need
A simple way to think it through:
- Start with liability. Ask what you could lose in a lawsuit: savings, home equity, future wages. Many drivers choose limits that at least cover their net worth. Some add an umbrella policy for more protection.
- Decide on physical damage. If your car is financed, collision and comprehensive are required. If it is paid off and worth little, compare the annual cost of these coverages with the car's value. If the premium is a large share of what you could ever collect, dropping them may make sense.
- Fill the gaps. Consider UM/UIM to protect yourself from other drivers, and check your state's PIP or MedPay rules.
- Set deductibles last. Pick a level you could comfortably pay, then compare prices.
The bottom line
Liability protects other people from you; collision and comprehensive protect your car; the optional coverages fill specific gaps. Know your state minimums, but treat them as a floor rather than a recommendation. Once you know what coverage you want, check your rate with the same limits across several companies so the comparison is fair.
This guide is general information, not insurance, legal or financial advice. Coverage rules, discounts and pricing vary by insurer and state, so confirm details with your insurer or your state insurance department. See our editorial standards and advertising disclosure.
