What are the basic types of auto insurance coverage?

Basic types of auto insurance coverage

Auto insurance can be broken down into three major types of coverage – liability coverage, personal property coverage and personal injury protection.

In terms of auto insurance coverage, first party is the policy holder, while the the third party is the other person involved in the accident. The second party is the insurer providing the coverage (the auto insurance company).

Liability Coverage (Third-party liability)

Liability coverage can be broken down into two types – property damage and medical payments (also called bodily injury). Property damage liability coverage protects you by paying for damages caused to others’ vehicles when you are at fault in an accident.

Medical payments (bodily injury) coverage also falls under liability coverage. This provides payment for medical treatment of bodily injuries caused to others.

Property Coverage (First-party expense)

Property coverage is normally referred to as comp and collision. Comprehensive (comp) coverage helps pay for damages or replacement of your own car resulting from something other than a collision, such as theft or storm damage. Collision coverage helps to pay for repairs or the replacement of your car due to an accident (collision).

Along with personal injury coverage, comp and collision coverage kicks in when the policy owner is not at fault or no one was at fault for the damages. Full coverage insurance refers to when a policy holder has both collision and comprehensive insurance.

Personal Injury Coverage (First-party expense)

Personal injury protection is for damages incurred to yourself in a covered accident. It provides coverage for certain expenses deemed reasonable and necessary such as medical and hospital bills, lost wages and funeral expenses. Personal injury protection also oftentimes pays your expenses from the result of a hit-and-run accident.