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Purchasing car coverage is typically viewed as a complicated task. Just sorting through basic information about liability, collision, comprehensive coverage, theft, and fault/no-fault options can take ages, and the average consumer will struggle to decipher the industry jargon in order to determine what sort of coverage he or she needs. Here, we will help you break down the different types of automotive coverage, and gain a better understanding of what you really need to be prepared for anything that may happen on the road.


Liability coverage is the most basic type of car policy. A minimum amount of coverage is required for drivers in most states, as this is the type of coverage that will be used to pay for any damages you may cause to another person or vehicle should you be at-fault in a traffic accident. If the damages you cause turn out to be more than the amount of coverage you have, the other driver may be able to go after you personally, putting your home, vehicle, and other property at risk. This is why most plan professionals recommend carrying a large liability policy. In other words, your state may require a minimum amount of coverage, but more is better when it comes to protecting yourself from liability on the road.

Collision Coverage

Another part of an auto package is collision. This is the coverage that will pay for repairs or replacement of your car or truck, in the event that you are ever at-fault in a driving accident. While not everyone chooses to carry a collision policy, it is wise to do so if you are driving a leased, new, or otherwise valuable vehicle. However, keep in mind that the payout from collision policy may be significantly less than the cost of replacing the car. Gap plans, which we will discuss shortly, can help to compensate when collision coverage falls short.

The cost of collision coverage largely depends on the deductible a motorist is willing to take on. The deductible is the amount the driver will pay before the company picks up the tab, and the higher your deductible, the lower your collision cost will be.

Comprehensive Coverage

Similar to collision in that comprehensive coverage compensates for repairs and loss of a vehicle, and true to its name, comprehensive automotive liability covers the areas that collision does not. Complete, comprehensive coverage reimburses drivers when their car is damaged by an unidentified individual or by an act of god or nature. Vandalism, hurricane, flood, tornado, fire, and other damages are covered if you carry a comprehensive policy, though some carriers make exceptions and it is important to ask for details before making a purchase.

As with collision, comprehensive coverage will also involve a deductible that will largely determine rates.

Theft policies

Comprehensive coverage will reimburse you for the cost of replacing a vehicle or its parts in the event that the car or its pieces are stolen. According to the Information Institute, vehicle theft is on the decline. Certain regions of the country face greater risk of automotive theft, however, with the Western and Southern states being the risky places.

No fault

No fault policies are in effect in twelve states including Florida, Hawaii, Kansas, Kentucky, Massachusetts, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, Utah, and Washington D.C. A no-fault policy covers drivers for their own medical expenses regardless of who is determined to be at fault in a vehicle accident. No fault also limits the conditions under which one can sue another motorist for damages. The benefits of this type of coverage include the fact that you are automatically covered and can begin treatment right away in the event of a medical emergency. However, some drivers disagree with the limitations placed on lawsuits by this coverage, so do make sure to read your policy closely before signing with an agent.

Now that you have an overview of the different types of automotive, you are ready to begin evaluating companies and policies to get the best possible rate for the policy you need!