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What is Liability Insurance?

Liability insurance protects you from financial losses in the event of an accident that is determined to be your fault. Most states require you to have liability insurance to register a vehicle or be issued a driver's license.Liability coverage is typically displayed with three numbers, such as 100/300/100. In this example, the insurance policy would cover a max of $100,000 in bodily injury per person, a max of $300,000 in bodily injury per accident, and a max of $100,000 for property damages.Bodily Injury - Typically, your car insurance's bodily injury coverage will cover medical bills to treat injury or sickness, and any loss of income resulting from the injury, funeral costs, pain, and suffering.Property Damage - Property damage covers the damages you have done to another person's vehicle or property in the accident. This can include any vehicle repairs and any damages to a home, fence, garage, etc. Crash on the freeway into a guardrail, in California, and the state will bill you for the damages.

What is Collision Insurance?

Collision coverage pays for repair and replacement costs for your car when your car is involved in a collision with another vehicle or object. The coverage kicks in after you exceed your deductible. For example, if you have a $500 deductible and the repair cost was $1,700, you will pay $500 out of pocket, and the insurance will pay $1,200. Deductibles for collision coverage commonly range from $0 to $1,000. Choosing a higher deductible lowers your auto insurance costs. It requires you to pay more out of pocket before your insurance coverage starts paying.

What is Comprehensive Insurance?

Comprehensive coverage addresses damages to your vehicle that are not the result of a collision with another vehicle. Comprehensive car insurance helps pay for damages from theft, vandalism, falling objects, fire, storms, floods, earthquakes, and a collision with an animal. Comprehensive car insurance also comes with a deductible amount you select, ranging from $0 to $1,000.

What is Gap Insurance?

Gap insurance pays the company that finances your car the difference between your vehicle's present value and the amount you owe on the vehicle. Without gap insurance, if you total your vehicle and owe more on it than it is worth, you would be responsible for the difference between the loan balance and your vehicle's value. Some car loans and leases require gap insurance.

Some other common auto insurance coverages include:

Medical Payments - Car insurance that covers medical payments is optional. It covers expenses for you and your passengers resulting from a car accident. It also covers you as a passenger in another person 's vehicle or if you are hit by a car when on foot. Common coverage levels are $1,000, $5,000, $10,000, $25,000, $50,000, and $100,000.Personal Injury Protection (PIP) - Personal injury protection covers medical expenses but is broader than medical payment insurance. PIP includes coverage for funeral costs, pain and suffering, and lost wages for you or your passengers regardless of fault. In some states, PIP is required.Uninsured Motorist Coverage - Uninsured motorist coverage covers you in the event you are hit by an uninsured driver or are the victim of a hit and run driver. Uninsured motorist insurance pays car repair bills, medical bills, lost wages, and pain and suffering up to your policy coverage limit. Some states require uninsured insurance coverage.Underinsured Motorist Coverage - Underinsured motorist coverage covers you in the event the other driver's coverage isn’t enough to pay for the damages done to your car, property, or you. Uninsured motorist insurance makes up for the difference between what the other party's insurance pays out and your total costs, up to your policy's dollar limit for coverage. Some states and cities have a very high percentage of uninsured drivers. Per a 2015 study, over 25% of drivers in Florida were uninsured.