Auto Insurance Coverage: What Each Line on Your Policy Does
State minimum liability limits were set decades ago and have not kept up with the cost of a serious crash.
At a glance
Figures checked 1 Sep 2026
What to take away
- Liability protects other people and your own assets. It is the line to raise first.
- Collision and comprehensive protect your car, and stop being worth it once the car's value approaches the deductible.
- Uninsured and underinsured motorist coverage matters because roughly one driver in eight is uninsured.
An auto policy is several separate coverages sold together. Understanding which one pays in which situation is what stops you from over-insuring a fifteen-year-old car while carrying liability limits that a single hospital stay would exhaust.
| Coverage | Pays for | Worth prioritising? |
|---|---|---|
| Bodily injury liability | Injuries you cause to others | Yes — raise this first |
| Property damage liability | Damage you cause to property | Yes |
| Collision | Your car after a crash you caused | Only while the car holds value |
| Comprehensive | Theft, hail, flood, animal strikes | Only while the car holds value |
| Uninsured / underinsured motorist | You, when the at-fault driver cannot pay | Yes |
| Medical payments / PIP | Medical costs regardless of fault | Depends on your health plan |
Reading 100/300/100
Those numbers are thousands of dollars: $100,000 of bodily injury per person, $300,000 per accident, $100,000 of property damage. Many states set minimums far below that. If you cause a multi-car crash with injuries, the gap between the policy limit and the judgment comes from your assets and future wages.
Raising liability from state minimum to 100/300/100 is one of the cheapest risk reductions available — often a few dollars a month, because severe claims are rare but ruinous.
When to drop collision and comprehensive
A rough test: if the annual premium for both exceeds about ten percent of the car’s actual cash value, the coverage is no longer buying much. The maximum payout is the car’s value minus the deductible, and that ceiling falls every year.
Common questions
Usually liability and, if you carry them, collision and comprehensive extend to a rental in the US. Confirm with your insurer before paying for the counter waiver.
Often, and for three to five years. For small damage, compare the likely surcharge against the claim amount before filing.
In most states insurers use a credit-based insurance score. A few states restrict or prohibit it.