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Types Of Car Insurance Explained, Liability, Comprehensive, Collision Coverage, Such That a Child Could Understand

There aren’t too many topics of conversation that will get anyone with a pulse jacked up like auto insurance!

Talk of premiums, deductibles, limits, and promises that (insert name) can save you (insert $ figure or %) for switching is enough to get anyone fired up.

We should all take a second to calm down before moving forward because the fact of the matter is auto insurance is important to your financial health.

Average auto insurance prices from 2008 to 2017

Note: Auto insurance policies have skyrocketed for young drivers and also those which have a poor driver history.

Most companies offer a variety of products and most of them are routinely misunderstood.

While you may not share the same enthusiasm for auto insurance as others, that doesn’t mean you can make the costly mistake of not understanding your personal auto coverage.

Statistically there has to be someone, somewhere that gets excited over car insurance right?

What are Some of the Traditional Products Offered?

Liability Insurance

State Minimum Liability Insurance is required by all states in the U.S. with varying amounts of minimum coverage required by each state.

For more information on your state’s current levels you can perform a table search below or contact an agent at your preferred insurance provider.

Minimum & Average Liability by State & Uninsured Motorist Requirement

StateMonthly Car Insurance RateAnnual Car Insurance RateLiability Limits
(in thousands of dollars)
Uninsured Motorist Coverage Required?
Alabama$127$1,52925/50/25No
Alaska$134 $1,60550/100/25
No
Arizona$102$1,42615/30/10No
Arkansas$117$1,40025/50/25No
California$164$1,96315/30/5No
Colorado$130$1,56025/50/15No
Connecticut$137$1,64420/40/10Yes
Delaware$149$1,78815/30/10No
Florida$163$1,95610/20/10No
Georgia$190$2,28025/50/25No
Hawaii$121$1,45220/40/10No
Idaho$103$1,23625/50/15No
Illinois$143$1,71620/40/15No
Indiana$136$1,63225/50/10No
Iowa$106$1,27220/40/15No
Kansas$112$1,344

25/50/10Yes
Kentucky$136$1,63225/50/10No
Louisiana$111$1,33215/30/25No
Maine$86$1,03250/100/25Yes
Maryland$98$1,17630/60/15Yes
Massachusetts
$103$1,23620/40/5Yes
Michigan$206$2,47220/40/10No
Minnesota$148$1,77630/60/10Yes
Mississippi$93$1,11625/50/25No
Missouri$99$1,18825/50/10Yes
Montana$145$1,74025/50/10No
Nebraska$116$1,39225/50/25No
Nevada$98$1,17615/30/10No
New Hampshire$123$1,47625/50/25Yes
New Jersey$168$2,01615/30/5Yes
New Mexico
$114$1,36825/50/10No
New York$103$1,23625/50/10Yes
North Carolina
$122$1,46430/60/25Yes
North Dakota$130$1,56025/50/25Yes
Ohio$69$82825/50/25No
Oklahoma$64$76825/50/25No
Oregon$112$1,344

25/50/20Yes
Pennsylvania$113$1,35615/30/5No
Rhode Island
$156$1,87225/50/25No
South Carolina
$123$1,87225/50/25No
South Dakota$148$1,77625/50/25Yes
Tennessee$135$1,62025/50/15No
Texas$126$1,51230/60/25No
Utah$96$1,15225/65/15No
Vermont$94$1,12825/50/10Yes
Virginia$108$1,29625/50/20Yes
Washington$124$1,48825/50/10No
Washington D.C.$212$2,54425/50/10Yes
West Virginia
$91$1,09220/40/10Yes
Wisconsin$101$1,21225/50/10Yes
Wyoming$83$99625/50/20No

You’ll notice when looking at examples of liability insurance the numbers are usually shown in the format 10/20/10. (note these are fictional numbers and your states minimum levels may be different)

The first two numbers (10/20) refer to the bodily injury liability limits to help pay for injuries or death to another party. It is read as $10,000 paid to each person with a maximum of $20,000 per occurrence.

The final “10” refers to the $10,000 worth of coverage for property damage in an at fault accident.

Most companies offer many different levels of liability coverage and is often the best value. Many times hundreds of thousands of additional coverage can be purchased for only slightly higher than the cost of the state minimum coverage.

Keep in mind that liability insurance does NOT pay for damages to your property, only to the other party in the accident.

Comprehensive and Collision Coverage (They are Two Separate Coverages)

If you are leasing your vehicle or still making payments, the terms of your lease or auto loan likely stipulates that you carry both Comprehensive and Collision coverage to protect dealer or lender’s interests.

Average Cost of Adding Comprehensive & Collision to a Policy

StateAverage cost of liability policyAverage cost of a policy comprehensive / collisionAverage cost to add comprehensive / collision
Alabama$643$1,567$924
Delaware$697$1,580$883
California$962$1,916$954
Florida$1,009$1,830$821
Georgia$593$1,391$798
Kentucky$612$1,496$884
New York$1,169$2,456$1,287
North Carolina$899$1,596$697
Tennessee$986$1,693$707
Texas$768$1,495$727
Washington$1,047$1,863$816

Even if you own your car outright, you may still select one or both of these coverages as they reimburse you for damages to your automobile.

As you can see from the table below the average claim for both coverages is fairly high.

Average Cost of a Claim

YearAverage Collision Coverage ClaimAverage Comprehensive Coverage Claim
2009$3,067$1,389
2010$3,211 $1,476
2011$3,364$1,524
2012$3,101$1,490
2013$2,861$1,585
2014$2,869$1,417
2015$2,950$1,593

What Does Comprehensive Coverage Cover?

When each coverage kicks in is the real difference in the two. Comprehensive insurance protects you from losses incurred to damage to your car by things other than a collision.

Below is a table for comprehensive coverage:

Comprehensive Coverage Benefit
It pays to replace your car if it’s stolen
It pays to repair damage from animal collisions
It pays to repair weather damage
It pays to repair flood damage
It pays to repair fire damage

Examples would include theft, vandalism, natural disaster, falling objects, fire, hail, flood, striking and animal. 

Not all comprehensive insurance is exactly the same and it’s important to go over the details of your coverage with a licensed insurance agent.

Here is a table so you know what it covers:

 Damage NOT from a collision which includes
1Damage from hitting an animal
2Glass damage
3Theft
4Vandalism
5Certain natural disasters
6Fire
7Falling objects

When Would I Have to Use Collision Coverage?

That leaves Collision insurance to reimburse you for losses incurred when you’re vehicle is involved in an accident with either another car or a stationary object.

Often times, collision insurance will also help when a vehicle hits your car when it’s parked.

This table outlines what you would collision coverage for:

This is What Collision Covers
Pays for damage to your vehicle when YOU cause an accident.
Pays for damage to your vehicle when "another driver" causes an accident.
Pays for damage to your vehicle in circumstances not covered by other sections of your policy.

Other Coverage You May or May Not be Required to Carry

There are several other less traditional products that your state may or may not require that your insurance company can provide.

Examples of these include uninsured motorist insurance, rental car reimbursement by a major insurer, medical payments, towing and service, no-fault insurance, and DUI/DWI insurance

For more information on these and other products that may be available to you it is recommended that you contact a licensed insurance agent who is knowledgeable in your state’s insurance laws.

Additional Car Insurance Company Information

GEICO’s Insurance Comparison

Allstate’s Cool Apps

Farmer’s Gap Insurance

Progressive’s Roadside Assistance

USAA’s Roadside Assistance

Traveler’s Car Insurance Discounts

Metlife’s Flood Claim

Amit Gangrade

Amit Gangrade

Amit Gangrade is from Orlando, Florida. He is a recent alumni from the University of Florida, where he studied anthropology and Spanish, and will be attending law school at Emory University in the fall of 2014. Amit is also a professional content writer and blogger at www.InsuranceLand.org.

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