When you look to purchase car insurance, you will be asked how much you want to insure your car for both collision and liability. It is difficult to determine which coverage you should consider, and unless you have a newer vehicle, you may not need as much insurance. While most people should get comprehensive insurance, which protects against natural disaster damage and vandalism, it is wise to know the difference between collision and liability to determine how much you should pay.
What is liability insurance?
Liability is the insurance that all motorists are required to possess in order to register their car. This type of insurance covers damages to other people and their property when you are involved in a wreck. Liability is made up of two parts, bodily and property damage. To know how much of each insurance type to purchase, you will want to check what your state requires. Insurance companies are known to claim that you need more than the actual amount, because it will increase your insurance premiums.
How does liability insurance work?
You will only pay one premium for liability insurance, but it is divided into specific amounts. What you will see is a/b/c with numbers such as 25/50/25. What this means is $25,000 will go towards medical expenses for the passengers, up to $50,000. Finally, $25,000 will go towards the repairs on the property you have destroyed.
What is collision insurance?
Collision insurance covers your car if you are in an accident, regardless of who was at fault. This is important if you are in a wreck with someone who does not have insurance. The amount of collision insurance you should get will depend on the age of the car and its value. If you have a car is low in value, and you get in an accident, sometimes the insurance will pay you for the value of the vehicle. In this case, you will want to get insurance that covers only the amount your car is worth, so you are not paying extra each month.
What collision insurance does not cover
Collision insurance does not cover accidents with animals. When you live in an area where exotic or forest animals are crossing the road, you will want to consider a comprehensive insurance policy. Insurance companies will also not cover damages to your automobile that occur due to poor maintenance.
Difference between collision car insurance vs. liability insurance
Collision insurance covers your damages and liability covers damages to the other person in the wreck. Liability is the one the state is worried about, because it will affect the lives of other people. The state is not concerned about lawsuits stemming from you failing to seek medical treatment or fix your vehicle.
Every driver should get at least the minimum requirement for liability insurance, and then some collision insurance. It is very important also to talk to car loan companies to see if they have a required minimum for each of these insurance types, as well.