You can think of your auto insurance as playing two roles. The first is insurance for you, primarily your vehicle. The second is insurance for other people, which primarily refers to your liability coverage. While liability coverage covers injuries to others or damage to the property of others, it also protects you financially.
Insurance for you
If you have collision and comprehensive coverage for your vehicle, these are the two coverages that protect your car or truck. Collision coverage covers damage to an impact with another vehicle or a stationary object but also covers vehicle rollovers. Comprehensive coverage protects your vehicle against fire, theft, vandalism, floods, and some similar risks. You may also have some related coverage like rental car coverage, which helps cover the cost of the rental if your vehicle is out of service while accident damage is being repaired.
Your policy may also have medical coverage for you if you’re injured in an accident. Rules for medical coverage can vary, so it’s important to discuss this coverage with your agent.
Insurance for others
Liability coverage on your policy can pay for the damage to other vehicles, signs, lamp posts, or most other things that can be damaged in a driving mishap. While some types of property damage can be expensive, the larger financial risk is usually bodily injury liability. If someone else is injured and you are at fault, you could be liable for the cost of their injuries or other damages, like lost wages. Your insurance policy protects you up to the liability coverage limits you’ve chosen but the state minimum mandated coverage may not be enough. Any liability judgments above your coverage limit have to be paid out-of-pocket and may require a sale of assets or garnished wages to pay off.
Fortunately, liability coverage is often one of the more affordable changes you can make on your policy and, arguably, it’s among the most important.
Your auto insurance policy protects you in ways that may not be obvious, but only if your policy is structured to meet your current needs. If you haven’t reviewed your coverage with your agent recently, reach out to schedule a policy review. You’ll gain the peace of mind that comes from knowing how your policy works and take comfort in knowing that your policy is structured to provide the protection you need.