Your auto insurance policy isn't one coverage. It's several different coverages, each designed to do something specific.
Understanding those differences can help you compare quotes, choose appropriate limits, and make better decisions about deductibles.
Let's break down the major components.
1. Liability: Damage or Injuries You Cause to Others
Liability insurance helps pay for injuries and property damage you're legally responsible for causing to others.
Texas requires drivers to demonstrate financial responsibility, commonly through liability insurance. The minimum required limits are 30/60/25:
- $30,000 for bodily injury to one person.
- $60,000 for bodily injuries per accident.
- $25,000 for property damage per accident.
Those are minimums, not necessarily the limits that make sense for your circumstances.
If a serious accident exceeds your limits, the remaining costs can become your responsibility. Liability coverage can also help pay legal defense costs if you're sued.
Learn more about auto insurance coverage and limits.
2. Collision: Damage to Your Vehicle
Collision coverage helps pay to repair or replace your vehicle after a collision with another vehicle or object, regardless of who caused the accident.
It typically has a deductible.
3. Comprehensive: More Than Collisions
Comprehensive coverage helps protect your vehicle against losses such as theft, hail, fire, vandalism, and falling objects.
For Texas drivers, hail damage is a particularly relevant example.
Comprehensive coverage typically has its own deductible, which may differ from your collision deductible.
4. Total Loss: How Your Vehicle Is Valued
What happens if your vehicle is declared a total loss?
Collision and comprehensive coverage generally pay based on your vehicle's actual cash value, which reflects what it was worth immediately before the loss, not necessarily what you paid or still owe.
If you financed or leased your vehicle, that difference matters.
GAP insurance, sometimes called loan or lease payoff coverage, can help cover an eligible difference between your vehicle's value and the outstanding loan or lease balance, subject to coverage limits and exclusions.
GAP coverage is not automatically included in every auto policy.
5. Uninsured and Underinsured Motorist Coverage
What happens if another driver causes an accident but doesn't have insurance or doesn't carry enough?
Uninsured/underinsured motorist coverage can help pay for your medical bills and vehicle repairs, subject to your policy's limits, deductibles, and conditions.
In Texas, insurers must offer this coverage, but you can reject it in writing.
6. Personal Injury Protection and Medical Payments
These coverages help address medical expenses following an accident.
Personal Injury Protection (PIP) helps pay certain medical expenses and can also help with lost income and other eligible expenses.
Texas auto policies include PIP unless you reject it in writing.
Medical Payments coverage helps pay medical bills for you and your passengers. It may also apply if you're injured as a pedestrian or while riding in someone else's car.
Unlike PIP, Medical Payments coverage doesn't cover lost income.
7. Rental Reimbursement and Other Options
Rental reimbursement can help pay for temporary transportation when your vehicle is unavailable because of a covered loss.
Other optional coverages may include:
- Roadside assistance and towing: Help with certain roadside emergencies and towing expenses.
- Rideshare coverage: May help address coverage gaps when driving for services such as Uber or Lyft.
- Delivery-use coverage: Depending on the insurer, additional coverage may be needed when using your vehicle for deliveries.
- Custom equipment coverage: May provide additional protection for certain aftermarket vehicle modifications.
These benefits aren't automatically included in every policy.
Understanding Your Deductibles
Your deductible is the portion of a covered claim you pay before your insurance pays the rest.
For example, consider a collision claim involving $5,000 in covered repairs:
| Deductible | Your share | Insurance payment |
|---|---|---|
| $500 | $500 | $4,500 |
| $1,000 | $1,000 | $4,000 |
Illustrative example assuming the full repair amount is covered, with no other adjustments.
Liability, PIP, and Medical Payments coverage generally don't have a deductible.
Collision and comprehensive coverage typically have separate deductibles, and you may be able to select different amounts for each.
Generally, a higher deductible can mean a lower insurance premium.
However, it also means you're responsible for more of the expense after a covered claim.
The goal isn't necessarily to choose the lowest premium. It's to find a balance between the premium and the deductible you can comfortably manage.
Understanding Your Policy Starts With Knowing What's Inside
Two auto insurance quotes can have very different coverage limits, deductibles, and optional benefits.
Before comparing prices, make sure you're comparing the actual coverage.
At Cleaver Insurance Agency in Bartonville, we help Texas drivers understand their options and make informed insurance decisions.
Have questions about your current auto insurance policy?
We're happy to help you review it.
Call or text 682-474-0174.
Coverage descriptions are general educational information. Actual coverage, exclusions, limits, deductibles, and availability depend on the policy and insurer.
Call Cleaver Insurance Agency or request a Coverage Review.