Car Insurance Coverages Explained

By January 18, 2018 Personal Insurance

Do you know the different coverages in your auto policy? There are several coverages provided in most standard policies, but the questions we get usually involve the following 3 types of coverages:

Liability Only: this is what is required for you to have by law to operate a vehicle. This provides coverage for injuries and/or property damage to another party’s vehicle should you be at fault in an accident. Limits vary, but we can recommend the minimum that we feel you should have to be protected.

Comprehensive (OTC): Other than collision coverage is just that. This is for property damage to your vehicle caused by a non-collision event. Examples include: hitting a deer, water damage and hail damage among several others. A deductible will usually apply for this coverage.

Collision: This covers your damaged vehicle in the event of an accident where you hit another vehicle or some other object such as a building, as an example. Again, this will be subject to a deductible but protects your car up to the actual cash value of the vehicle for its damage.

So, what coverages should you carry? Every car on the road needs liability coverage. Do you have a loan? If so, lenders will require you to carry comprehensive and collision coverage. No loan? You can choose to only carry liability but could be out of pocket for expenses to your damaged vehicle. For vehicles of lesser value, some insureds choose not to carry comprehensive and collision (“full coverage”). This is a choice that is entirely up to you and your comfort level with the risks involved.