Skip to main content

Auto Insurance 101

By January 31, 2019April 9th, 2020Auto Insurance

Auto Insurance 101

Types of Auto Coverage

There are a number of components that make up your basic auto policies.  What is included in your policy can vary from state to state.  Here are some of the types of coverage under the umbrella of auto policies.

Liability Insurance

Liability insurance covers you in the event that you are in an accident that is determined to be a result of your actions.  It covers the cost of repairing any property damaged by the accident, including medical bills from resulting injuries.  Most states have a requirement for the minimum amount of coverage drivers must have.

Collision Coverage

Collision coverage pays for repairs to your car in the event of an accident.  If your car is totaled, collision coverage will pay the value of your car.

Comprehensive Coverage

Where liability and collision cover accidents, comprehensive covers different events.  Some things that it can cover are weather damage, theft of your vehicle, or even hitting a deer.

Personal Injury Protection

In the event of an accident, Personal Injury Protection will pay your medical bills, as well as the medical bills of your passengers, no matter who is at fault.  This coverage is not available in all states.

Uninsured/Underisured Motorist Protection

Even though state laws mandate that all drivers need to be insured, there are always some drivers who are not.  There are also those whose insurance covers the bare minimum directed by the state.

So, what happens if you have an accident, and the person at fault either doesn’t have coverage or doesn’t have enough coverage?

What would generally happen is that you will not receive payment, or you will not receive a payment that covers the costs of your damages, because it exceeds the limit of the policy in question.

This type of policy protects you from being impacted by someone else’s lack of coverage.

Basic Auto Policies

Like you’ll find with most other types of insurance, a single car insurance policy can include several types of coverage.  To decide what should be part of your policy, it is important to research the options available to you.  The most important thing, however, is what is required by your state.

Here is what most basic policies consist of:

Bodily Injury Liability

This coverage applies to injuries that you cause to someone else.  You and all other family members listed on the policy are also covered.

Medical Payments or Personal Injury Protection (PIP)

This coverage pays for treatments of injuries to the driver and passengers of the policyholder’s car.  At its broadest level, PIP can cover medical payments, lost wages, and the cost of replacing services normally performed by someone injured in an auto accident.  It may also cover funeral costs.

Property Damage Liability

This coverage pays for damage that you (or someone driving your car with your permission) may cause to someone else’s property.  This can mean damage to someone’s car but can also cover lamp posts, telephone poles, fences, buildings or other structures your car hit.


This coverage pays for damage to your car as a result of a collision with another car, object or as a result of flipping over.  It also covers damage caused by potholes.


This coverage reimburses you for loss due to theft or damage caused by fire, falling object, missiles, explosion, earthquake, windstorm, hail, flood, vandalism, riot or contact with animals like, birds or deer.

Unisured/Underinsured Motorist Coverage

This coverage reimburses you if you are hit by an uninsured or hit-and-run driver.

Underinsured motorist coverage comes into play when an at-fault driver has insufficient insurance to pay for your total loss.  This will also protect you if you are hit as a pedestrian.

Remember, this coverage can vary from state to state.  Be sure to conduct thorough research and consult with your insurance agent.

Comprehensive Coverage

Comprehensive insurance is described as coverage for your car that is caused by events beyond our control.

Comprehensive insurance covers the following:

  • Theft
  • Vandalism, fire, riots and explosions
  • Windshield and glass damage
  • Falling trees/objects
  • Storms, hail, wind, floods, lightning, earthquakes
  • Accidents with animals

Some things it doesn’t cover:

  • Collision with an object
  • Collision with another car
  • Medical/legal expenses
  • Stolen property inside car

For more information about comprehensive insurance, contact your insurance agent.

Auto Insurance Myths

Today we are going to separate fact from fiction about factors that affect the cost of car insurance.  There are several myths that people think are common knowledge but have been misinformed about.  Here are a few of the most common misconceptions about what factors affect your policy.

Myth 1 – Car Color

Your car’s color has no affect on the cost of your policy.

Myth 2 – It costs more to insure your car when you get older.

This is not true.  In fact, older drivers may be eligible for special discounts.

Myth 3 – Soldiers pay more for insurance than civilians.

If you are military, you actually qualify for a discount on auto insurance. Some companies also provide discounts to former members of the military as well as their families.

Myth 4 – Personal auto insurance covers business use of your car.

If you are self-employed and use your car for business purposes, personal insurance may not protect you.  It’s best to purchase a business policy for your car.

To learn more about what other myths exist about car insurance visit Insurance Information Institute.

As always, if you have any questions let us know!