Auto Insurance Coverage Levels

Minimum Levels Might Not Be Enough

• When you apply for an auto insurance policy, the company will give you a quote that covers the minimum levels your state requires. Those numbers might not be the best choice, though. For instance, some states mandate $10,000 of property damage coverage. If you were to crash into a house or other building, the damage level could be considerably higher. Any damages awarded above the $10,000 would be your responsibility, and your home or other assets could be used to pay it.
  
  

Understanding the Numbers

• Most insurance coverage levels are quoted in the form of two- or three-digit numbers. Sometimes there will be a grouping of two or three of those numbers. "25/50/20" might be the configuration you would see in terms of liability insurance. Each of the numbers is a notation for tens of thousands of dollars of coverage. In this example, the policy would provide $25,000 bodily injury coverage for each person injured, with a maximum of $50,000 per accident, and $20,000 for property damage.
  
  

Required Coverage, Versus Optional

• In addition to coverage amounts, most state laws require that specific types of coverage be obtained, while leaving others to the discretion of the driver. These are more uniform than the coverage amount requirements. For the most part, liability coverage is required. Insurance protection for the driver's vehicle and medical bills is generally optional. Things such as theft, vandalism and uninsured motorist coverage are usually not mandated by state law, either.
  
  

Types of Liability Coverage

• Liability coverage in general refers to coverage for damages to others or their property caused by your vehicle. It is divided into bodily injury liability and property damage liability. Bodily injury covers medical expenses and loss of income in the event of injury or death. Property damage pays for damage to cars or other property your vehicle damages. Both also cover your legal expenses in the event of a lawsuit in regard to the accident.
  
  

Coverage for You

• There are a number of other types of coverage available, but the main ones cover your property or person (and others in your vehicle) in the event of a loss. Depending on the state, the coverage for injuries could be handled by medical payments, personal injury protection or both. Collision covers your vehicle in the event of a crash. Comprehensive coverage protects your vehicle against theft, vandalism and other non-collision related damage.