It boils down to liability towards others and coverage on your own vehicle
Auto insurance policies aren’t much different from one another, regardless of the name of the company. The coverage options are mostly the same, even if each company’s policies differ in appearance.
There are two main parts of your auto insurance policy that you’ll want to be aware of: your liability limits and your car’s physical damage coverage.
Auto Liability Insurance
Your liability limits are almost always the first coverages that you see on your policy. However, your policy may not even use the word liability when you’re looking at it. You’re more likely to see the words “Bodily Injury” and “Property Damage,” which are your liability limits if you’re held responsible for somebody else’s injuries or property damage.
Your liability limits will be written in one of two ways: either as one number (aka Combined Single Limits) or split into three numbers (aka Split Limits). Most people have split limits liability because it’s often a little less expensive. To further complicate things, the Bodily Injury category is split further into a per person limit and a per accident limit, which is where the three numbers come from when you include property damage.
So, your auto policy’s liability limits might look something like this on your auto policy:
Bodily Injury: $100,000/$300,000
Property Damage: $100,000
Or it might even be shortened to this:
Bodily Injury & Property Damage: 100/300/50
The first Bodily Injury number always refers to the per person limit, so this policy would pay a maximum of $100,000 for somebody else’s injuries in a car accident. The per accident limit of $300,000 would pay out that amount for any one accident, but is secondary to the per person limit of $100,000.
For example, if there was one occupant in the vehicle and their injuries cost $200,000, your auto insurance policy would only pay $100,000 because that is your per person limit, meaning you’d personally be on the hook for the remaining $100,000.
If there were three people in the car and they all had injuries of $100,000 each, then your policy would pay $100,000 to each person and would max out the $300,000 limit for that one accident.
Physical Damage to Your Own Car
The second key component of your auto insurance policy is the physical damage coverage on your own vehicle. This consists of two parts: comprehensive and collision. Comprehensive coverage is true to its name and covers a wide variety of things such as theft, fire, hail damage, broken or cracked glass, falling objects such as tree branches, and even hitting an animal on the road.
Collision covers your vehicle if you hit another vehicle or a solid object, such as a telephone pole, side railing, or building. Even though collision coverage only applies in a few circumstances, it’s more expensive than comprehensive because most auto claims involve collision accidents.
There are many parts to an auto insurance policy, but the important parts boil down to liability and physical damage to your own car. You may not need physical damage if you drive an older vehicle, but it’s worthwhile to check your liability limits to make sure they’re high enough to cover your assets. You’ll be on the hook for any injuries you cause to other people if you don’t have high enough liability limits on your auto insurance.
Reach out to us to find out if your auto policy fully covers you and your passengers.