What’s On Your Auto Insurance: The Basics

If you’re looking over car insurance options, the good news is that every state requires certain coverages to be on your auto policy, so the basics are relatively standardized between quotes. The real decision making happens in the amount of coverage, or limit, you choose for those coverages (and in the optional coverages, which we go over here). This one’s about knowing what you’re already looking at.

Liability Limits (Bodily Injury and Property Damage)

This is the coverage that pays when you’re at fault in an accident and someone else gets hurt or their property gets damaged. Bodily injury covers medical bills, lost wages, and other costs you’re legally responsible for to the injured person. Property damage covers repairs to a car, guard rail, house, or other type of physical item damaged in the accident.

For this coverage, you choose your limits, or maximum you’d like the insurance company to pay for on your behalf. This is shown as three numbers, like 100/300/100. That means $100,000 per person injured, $300,000 total for all people, per accident, and $100,000 for property damage.

Choosing your limits is important – any injuries, damages, or resulting lawsuit over the limit you choose ultimately is your responsibility to pay, so this is not just about protecting others, it’s to protect your assets.

Uninsured/Underinsured Motorist (UM/UIM)

This flips the liability coverage around. If you’re hit by someone who doesn’t have insurance at all, or doesn’t have enough to cover your injuries, this is what pays instead. It steps into the other driver’s shoes when their coverage can’t do the job, or isn’t there.

Most states require some amount of this coverage, but the limit you carry matters a lot here, since it’s the only thing standing between you and an at-fault driver who simply can’t pay.

Medical Payments

This pays medical expenses for you and your passengers after an accident, regardless of who caused it. No fault has to be determined first.

A good example: you’re driving with a friend and get rear-ended. It’s not your fault, but your friend still has medical bills from the accident. Medical Payments covers that directly, without waiting on a claim against the other driver. It also comes in very handy on things where your health insurance might lack – deductibles, chiropractors, and even some types of alternative medicine.

Collision

This covers damage to your own vehicle from a collision, whether it’s with another car, a guardrail, or a pothole, regardless of who’s at fault. If you hit something, or something hits you, this is the coverage that pays to repair or replace your car, up to its value.

This coverage comes with its own deductible, separate from comprehensive.

Other Than Collision (Comprehensive)

This covers damage to your vehicle from things that aren’t a collision: theft, vandalism, fire, hail, flooding, hitting an animal. Basically, anything that happens to your car that isn’t you crashing into something.

Glass damage falls under this coverage too. A cracked windshield is one of the most common comprehensive claims out there, and a lot of policies offer a separate, lower deductible just for glass, sometimes even total waiver of the deductible.

Transportation Expenses (Rental Reimbursement)

This pays for a rental car, or reimburses your transportation costs, while your car’s in the shop after a covered claim. It typically has a daily limit and a maximum number of days, so it’s not unlimited, but it’s what keeps you from being stuck without a vehicle while repairs are underway.

The Bottom Line

These are the coverages that make up the core of an auto policy, and most of them are either required or close to it depending on your state. The real differences between quotes show up in the limits you choose and in the optional coverages.

Also – check out Auto Insurance Optional Coverages – This is where a policy can really stand out.