How to Choose Between Options for Mandatory Auto Insurance Protection

Choosing a type of car insurance for the first time is much easier than picking an insurance carrier. Affordability is a major factor to consider, because you will need the money to pay on time every month to avoid lapses in coverage. Large selections of insurance carriers are available, and this level of competition can help in finding a great deal.

The cost of insurance is most affected by the type chosen, and there are only a few to consider. Different companies will vary in their definitions of types of coverage, and states will also vary in their guidelines on coverage policies and minimum payouts in case of accidents. The following rules will apply across states and insurance companies.

Liability Coverage

Liability means just what it says; this type of coverage only pays for damage caused to another party by the holder’s negligence. If Sue is found to be at fault for hitting Mark’s car, her liability insurance will pay up to specified totals for damages to Mark’s property and his injuries. It will not pay for Sue’s damages or injuries. Liability is the minimum form of insurance mandated in all states.

Each state has its own mandatory totals for minimum payouts with liability coverage, and understanding the minimum requires knowing how these policies are presented. A 25/60/15 label on the policy gives three important pieces of information. The first number is the maximum payout to any one person for injuries, and the second number shows total payout for injuries from a single accident. The last number is the total payout for property damage.

It is important to realize that liability may not cover all the costs of an accident, especially in cases of severe injuries. Any amount over the limit will be the responsibility of either the injured party or the negligent one, depending on whether the injured party attempts to recover losses. A higher level of liability insurance will be more expensive, but protection will be greater.

Full Coverage

Unlike liability, this one doesn’t mean at all what it sounds like. A full coverage policy simply means that the holder has elected to purchase additional coverage beyond liability. This may be collision, comprehensive, or both. While it is possible to find comprehensive coverage without collision, all collision policies require comprehensive coverage.

Comprehensive Policies

Natural disasters, theft, vandalism, and many other bad things can happen to a car off the road. Lending institutions want a way to ensure compensation in cases of damage involving no liability. Policy holders may also want comprehensive coverage in areas where natural disasters are more common or crime is high. These policies will often, but not always, step up the level of liability payouts.

Collision Insurance

New car purchases require that a collision policy be chosen until the loan is repaid. They vary quite a bit, but all represent a higher level of liability insurance and protection from other drivers with minimum liability and few assets. The cost of collision is higher than other types, and shopping around will definitely save money in the long run.

As a protection against existential threats in the future, insurance tends to be valued only when needed. There are instances where having more coverage is better, even if more expensive. An honest examination of the risk has to be balanced against current income to choose the best coverage.

Guest author Patricia White is a personal finances guru and freelance blogger for, a site she often recommends as a great wealth of information for learning more about car insurance. They have a variety of helpful articles to aid in understanding about car insurance which can help you save money -