What Coverage is Included in an Auto Insurance Policy?

A basic automobile insurance policy may include up to six different types of coverage. Usually each section is priced separately:

• Auto Insurance Liability
• Liability Coverage
• Personal Injury Protection
• Property Damage Liability
• Collision Insurance
• Comprehensive Insurance

Auto Insurance Liability

First is liability. This insurance covers you, the designated driver or policy holder, for injuries you may cause others whilst driving. If other family members are listed on the policy, then they are also covered when driving someone else's car, assuming they are doing so with their full permission.

Liability Coverage

It is crucial to have enough liability insurance coverage, because if you are involved in a serious motor vehicle accident you could be sued for a very large amount of money. If you have savings or a house, but not the insurance coverage, then your assets are at risk through a court case. Everyone tries to cut corners on their auto insurance but this is one area where it is wise to ensure that one has plenty of cover, and definitely more than the state minimum, in order to protect your assets such as your family home.

Personal Injury Protection

The second part of your policy is medical payments, otherwise known as personal injury protection or PIP. This is the amount of auto insurance coverage provided to pay for the treatment of injuries to the driver and passengers of the policyholder's vehicle. It is possible under some conditions for PIP to cover lost wages, medical payments or funeral costs.

Property Damage Liability

Property damage liability is an important part of your policy. This covers you for damage that you (or someone else driving your car but with your permission) may cause to someone else's property. Most often this means damage to another vehicle, but it can also include damage to lamp posts, fences or other structures.

Collision Insurance

Fairly obviously, collision covers associated costs for damage to your vehicle when in a collision with another. It can also cover damage caused by potholes in unmade up roads.

Comprehensive Insurance

Comprehensive auto insurance is protection against loss or damage due to theft or caused by something other than another vehicle. This could be fire, earthquake, flood or vandalism.