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What’s the difference between liability, collision, and comprehensive auto insurance?
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I don’t understand the difference between comprehensive coverage and collision coverage — do I need both if my car is older?
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The main differences between liability, collision, and comprehensive auto insurance are as follows:
1. Liability Insurance: This type of insurance covers damages and injuries you cause to others in an accident where you are at fault. It typically includes two components: bodily injury liability (for medical expenses and lost wages of the other party) and property damage liability (for damage to the other person’s property). Liability insurance does not cover your own injuries or car damage.
2. Collision Insurance: Collision coverage pays for damage to your own vehicle resulting from a collision, regardless of who is at fault. This includes accidents involving other vehicles or objects, such as a tree or guardrail. It typically requires you to pay a deductible before the insurance coverage kicks in.
3. Comprehensive Insurance: Comprehensive coverage protects against damages to your vehicle that are not the result of a collision. This includes events like theft, vandalism, natural disasters, or hitting an animal. Like collision insurance, comprehensive coverage usually comes with a deductible.
As for whether you need both collision and comprehensive coverage for an older car, it often depends on the car’s value and your financial situation. If the car’s value is low, some choose to forgo collision and comprehensive because the cost of the premiums may exceed the potential payout in the event of a claim. It’s best to evaluate your specific circumstances and possibly consult an insurance agent to determine the most suitable coverage for your needs.