What's the difference between comprehensive, collision and liability?

All 50 states require licensed drivers to carry a minimum amount of auto insurance. This minimal amount typically includes just liability insurance. If your vehicle is financed or leased, your lender may require you to have Comprehensive and Collision coverage too. These are called "physical damage" coverages. When your policy covers both liability and physical damage this is called a "full coverage" policy. One question that people often ask is, "Should I just get minimum liability insurance (which is cheaper), or do I need a full coverage policy?" The answer depends on your vehicle, how often you drive it, how much money you have saved, and where you live. Understanding the difference between liability and physical damage insurance will help you make an informed decision that's right for you. Keep in mind there are other important coverages out there you should consider too, such as Medical Payments/Personal Injury coverage, and Uninsured Motorist coverage.

Liability Insurance covers the damage to other vehicles, property, and medical care if you're at fault in an accident. It does not cover damage to your own car or your own medical bills. Having some form of liability insurance is the law in all states, although the amount of coverage can vary. Auto insurance liability limits may be expressed with three numbers, separated by slashes like this : 100/300/100. This is referred to as "split limits."

• The first number (100) refers to the bodily injury limit per person in a claim. If you're at fault for an accident that causes injury to others, your insurance company will pay no more than $100,000 to any individual for medical treatment.
• The second number (300) refers to the bodily injury limit for an entire claim. If you're at fault in an accident that causes injury to multiple people, your insurance company will pay no more than $300,000 for the combined medical costs.
• The third number (100) refers to the property damage limit for an entire claim. In this case, the insurance company will pay no more than $100,000 for any damage you cause to the vehicles or property of others.

In some states, other coverages are required in addition to liability. These may include medical payments/personal injury protection, uninsured motorist coverage, and underinsured motorist coverage.

Physical Damage Insurance offers protection when your vehicle is damaged. While both Comprehensive and Collision coverage protect your vehicle, the type of damage they cover is very different. Comprehensive insurance covers situations that collision does not, so having both of them keeps you protected in any situation.

• Comprehensive-An optional coverage on an auto insurance policy. If your vehicle is damaged or destroyed by something other than a collision with another vehicle (for example, a flood, a falling tree, or a collision with a deer), your Comprehensive coverage would reimburse your repair or replacement costs. Comprehensive coverage also reimburses you if your car is stolen. In all cases, you'd be required to pay a deductible, which is your share of those costs.
• Collision-An optional coverage on an auto insurance policy. If you're responsible for an accident involving another vehicle, and your vehicle is damaged, this coverage would reimburse you for repair or replacement costs for your own vehicle. You'd be required to pay a deductible, which is your share of those costs.