Which Coverage Components do I Need on my Auto Insurance?

Cheap auto insurance is very different than affordable auto insurance.  While every driver has the right to choose their auto insurance policy, there are some coverage components that should be thought about before making a final decision.

For example, if you have a loan for your car, your bank may require you to have full coverage on your vehicle.  Full coverage means that you have liability, comprehensive, and collision coverage on your car.  Confused yet?  No worries—here’s a breakdown of auto insurance terms:

Liability: This coverage reflects how much your insurance will pay the other person if you are involved in an accident.  It will cover the other person’s bodily injury and property damage; liability coverage will NEVER cover you and will ALWAYS go to someone else.  Many people choose to have “liability only” on their vehicles; however, if these vehicles are involved in an accident, the driver will not be covered for damage to their vehicle.

Collision coverage: This coverage pays for damage to your vehicle when your car hits or is hit by another vehicle.  This coverage involves a deductible, or a sum of money the insured must pay before the insurance company starts paying.  For example, if the repairs to your vehicle came to $700 and you had a $500 deductible, you would pay $500 and your insurance company would pay $200.  If the repairs came to $495, you would be responsible for the full $495 and your insurance company would pay nothing.

Comprehensive coverage: This coverage pays for damage to your vehicle that is caused by something other than collision (sometimes referred to as Other Than Collision or OTC coverage).  Some of the items covered include weather-related damage, damage from theft, damage from hitting an animal, vandalism, and fire damages.  This coverage also involves a deductible that the insured chooses.  

Deductible: As mentioned above, the deductible is an amount of money the insured must pay before the insurance company pays.  The choices for a deductible are often $250, $500, and $1,000 (there may be more choices depending on the insurance company).  The larger the deductible, the lower your premium will be.  When choosing a deductible, think about how much you would be able to pay out of pocket should you need to file a claim.

Remember that collision and comprehensive coverage are not required unless your bank stipulates that you have those coverages.  However, it is a good idea to consider having full coverage, especially since daylight savings is right around the corner, meaning more driving in the dark.  Take a moment to think about all the deer in Wisconsin and how it’s more difficult to see them at night.  Damage to your vehicle from a deer hit will not be covered by your insurance unless you have comprehensive coverage.

Contact your Wisconsin insurance agent if you have any questions on what your policy covers and whether or not you should choose full coverage on your vehicle.  We are always glad to help you choose the right coverage for you and your wallet!


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