Liability insurance is the one coverage type virtually every U.S. driver is legally required to carry. It pays for bodily injury and property damage you cause to other people when you are at fault in an accident. It does not pay to repair your own car or cover your own medical bills.

Most policies split liability into three numbers, such as 25/50/25. The first figure is the per-person bodily injury limit (in thousands), the second is the per-accident bodily injury limit, and the third is the property damage limit. State minimums vary considerably — some states set minimums as low as $10,000 for property damage, while others require significantly higher limits.

Carrying only the state minimum is legal, but it can leave you personally exposed if a serious accident exceeds those limits. The injured party can pursue you for the difference. Many insurance professionals suggest evaluating your net worth when deciding how much liability to carry, though a licensed agent can help you assess what makes sense for your situation.

State Minimum Liability Limits Vary Widely

Each U.S. state sets its own required minimum liability limits, and some are notably low by current cost-of-repair and medical standards. Carrying only the minimum keeps you legal but may not adequately protect your assets if you cause a serious accident. Reviewing your limits periodically — especially after major life changes — is a reasonable habit.

For a broader overview of how these coverages fit into a full policy, see Auto Insurance Decoded.

Collision Coverage: Protecting Your Vehicle After an Accident

Collision coverage pays to repair or replace your vehicle after it is damaged in a collision — whether with another vehicle, a guardrail, a fence, or any other object. Fault is largely irrelevant: even if you caused the accident, collision coverage still applies to your own car.

When you file a collision claim, you pay your chosen deductible first; your insurer covers the rest up to the vehicle's actual cash value (ACV). A $500 deductible is common, but selecting a higher deductible — say $1,000 — typically lowers your premium. The trade-off is a higher out-of-pocket cost if you do file a claim.

Collision is optional if you own your car outright. If you are financing or leasing, your lender will almost certainly require it. Because collision claims tend to be more frequent than comprehensive claims, this coverage often carries a higher premium.

~80%

Drivers carrying collision coverage

According to the Insurance Information Institute, roughly 80% of U.S. insured drivers carry collision coverage, making it the most commonly purchased optional coverage type.

~78%

Drivers carrying comprehensive coverage

The Insurance Information Institute also reports that approximately 78% of insured U.S. drivers add comprehensive to their policies, reflecting widespread awareness of non-collision risks.

Comprehensive Coverage: Beyond Accidents

Comprehensive coverage — sometimes called "other than collision" — protects your vehicle from damage caused by events outside a standard traffic accident. Common covered perils include theft, vandalism, fire, hail, flooding, falling objects, and collisions with animals.

Like collision, comprehensive uses a deductible. Because the events it covers — a hailstorm, a stolen car — tend to feel more unpredictable than fender-benders, some drivers find it psychologically easier to maintain. Statistically, vehicle theft and weather-related damage are real and recurring risks across many U.S. regions.

For a detailed side-by-side comparison of when each coverage applies in specific scenarios, Collision vs. Comprehensive Coverage walks through the key distinctions with practical examples.

How the Three Coverage Types Work Together

Most drivers who carry all three coverages effectively have layered protection. Liability handles what you owe others; collision and comprehensive handle damage to your own vehicle. A policy with only liability — sometimes called a "liability-only" policy — is the legal minimum in most states but leaves your own vehicle entirely unprotected.

The decision of how much coverage to carry is general financial planning territory. Consider your vehicle's current market value, your emergency fund depth, and your risk tolerance. Dropping collision on a high-value newer car, for example, is a very different risk calculation than dropping it on a paid-off older vehicle worth only a few thousand dollars.

For a comprehensive look at how all coverage types, deductibles, and premiums interact across a full policy, Auto Insurance End to End is a useful next read. If specific terms in your policy feel unclear, the Auto Insurance Glossary provides plain-language definitions for common policy language.

This article is for general informational purposes only and does not constitute personalized insurance or financial advice. Coverage terms, limits, and requirements vary by state and insurer. Consult a licensed insurance agent or adviser for guidance specific to your situation.