Are you shopping for car insurance and have no idea where to start? You’re not alone. The process can feel overwhelming with all the terms and choices out there, like collision, liability, or full coverage. The good news is you don’t need to be an expert. Here you can learn the three most common types of car insurance, explained simply.
Learn the difference between liability, collision, and comprehensive coverage with Infinity Insurance Agency, Inc. (IIA). Discover when you need each coverage type and how they work together.
Liability Coverage: What it is and why it's required
What Liability covers
Damage you cause to other people or their property when you are at fault. There are two separate coverages: bodily injury and property damage. For example, you hit another car or someone's fence — liability can pay for their property repairs, not yours.
Why Liability coverage matters
Almost all states (including California) require this coverage, making it necessary for legal compliance in most cases. The required minimum limits for this insurance depends on the state.
Liability Coverage Doesn’t cover
As this coverage is for the third party, it does not pay for your own vehicle or medical bills if you experience injuries in a covered accident. Other coverage types, however, can.
Liability insurance can be best for meeting state requirements and paying for inadvertent costs such as lawsuits. Beyond liability, there are additional coverages that can help you pay for other services.
Collision Coverage: cover your own vehicle
What Collision covers
On the flipside of liability, collision coverage can help pay for damages to your own car due to a covered collision accident, regardless of fault. The repair or replacement costs of your car may be covered. For example, if you back into a pole or get in a crash, collision coverage can help repair your car. A deductible applies to this coverage, which is the amount you pay out of pocket before insurance covers the remaining costs of your claim.
Why Collision Coverage matters
While it is not required by law, it may be required if you’re financing or leasing a vehicle, by the financial institution handling that loan. Collision coverage can be beneficial financially as it may help you avoid out-of-pocket costs.
Collision Doesn’t cover
It does not cover instances that are unrelated to collision, such as theft, vandalism, or even medical bills.
Collision can be best for drivers who want help paying for their own car’s damage after a covered accident occurs. It can help alleviate concerns if there is damage to your vehicle, particularly if it is newer or on the more expensive side. However, there are limits to accidents covered with collision, which is where comprehensive coverage may come into play.
Comprehensive Coverage: More than just accidents
What Comprehensive covers
Can help pay for the costs of other incidents not including collision, with an applicable deductible. For example, theft, fire, falling tree branches, vandalism, or damage caused by animals. Comprehensive coverage may also include certain natural disasters, depending on the state and policy.
Why Comprehensive Coverage matters
May provide financial relief against additional damage to your vehicle. Comprehensive insurance is usually paired with collision in a “full coverage” policy to offer added coverage to your own car.
Comprehensive Doesn’t cover
Despite offering a more robust coverage, there are certain situations that are not typically covered, like collision with another vehicle or injury-related medical expenses following an accident.
Comprehensive coverage can be best for providing reassurance against the unexpected, especially for newer or higher-value vehicles. It can help address various potential risks that other coverages can’t, within its own limits.
Do you need all three types of coverage?
Do you want a combination of coverages, also known as “full coverage” auto insurance? There are numerous factors to consider that can help you decide which coverage(s) you may need, such as your budget, location, the value of your vehicle, and other circumstances.
If you own your car and want to save money while complying with legal requirements, if applicable, liability might be enough.
If you’re financing your vehicle, the lender may require collision & comprehensive coverage. You may also consider these supplementary coverages to help financially handle additional risks.
If you drive an older car, weigh the cost of coverage against the value of the car to help you make the best decision for you.
A professional IIA agent can show you options from over 20 insurance carriers for you to make the best decision based on your budget and vehicle.
How IIA can help you
Spanish bilingual agents are available to explain each option in simple terms, so you can choose wisely.
Get a personalized quote for most diverse situations, whether you need an SR-22, have a foreign license, operate commercial vehicles, or more.
Receive no-pressure assistance and explore mobile-friendly resources.
Not sure which coverage is right for you? Let an IIA agent break it down for you. You can get a free quote today with no jargon or hassle by calling 1-855-478-3705 or requesting a free quote online.