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How do I compare auto insurance company options?

Here's what you need to know...

  • Liability insurance is extremely important because it is the first line of protection for you if you cause an accident
  • Collision auto insurance pays for damages to your car if you cause an accident
  • Comprehensive auto insurance provides coverage for other types of damage that may happen to your car

Buying auto insurance can be a bit confusing initially. There are many different forms of auto insurance and insurance companies also offer several different options when you buy the insurance.

Before making a purchasing decision, it is important to have an understanding of the basics of the auto insurance you are buying so that you know what you are comparing.

Enter your zip code into our FREE comparison tool above and start comparing auto insurance quotes in your area now!

Liability Auto Insurance

Liability auto insurance is mandatory car insurance coverage in 47 states if you want to register your car and drive legally. Liability insurance provides financial protection if you cause an accident.

It pays for repairs to someone else’s property and for medical expenses related to bodily injuries. It does not pay for repairs to your car or for injuries your passengers or you experience if you cause an accident.

Liability insurance is extremely important because it is the first line of protection for you if you cause an accident.

Most mandatory liability only auto insurance does not provide very much protection for you if you cause an accident.

If the damage costs exceed the limits of your liability insurance, you may be sued for the remaining expenses, leaving you open to potentially losing your home, your business and any assets you may own.

Since liability auto insurance is relatively inexpensive, it is recommended that you purchase additional insurance with higher coverage limits if at all possible.

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Collision Auto Insurance

Collision auto insurance pays for damages to your car if you cause an accident. Covered accidents include collisions with other vehicles, buildings, guardrails, fences and other objects.

If your car is involved in a hit and run accident, those damages are covered under collision insurance. Additionally, collision insurance provides coverage regardless of who is driving your car.

With collision insurance, the insurance company will only pay for repairs that are less expensive than the value of your car.

If you have an older car, it is easy for a relatively minor accident to result in repairs that are more expensive than the Blue Book value of the car.

As a result, the car will be declared a total loss and you will be paid for the depreciated value of the car. If you have a newer car that is financed or a car that is leased, you are required to carry collision coverage.

Comprehensive Auto Insurance

Comprehensive auto insurance provides coverage for other types of damage that may happen to your car. For example, if your car is stolen or damaged due to vandalism, it will be covered under comprehensive insurance.

Other types of damage covered include flood, fire, hail, flying rocks and tree limb damage.

Comprehensive also covers damage that may be caused by hitting an animal, such as a deer. Comprehensive coverage is required for cars that are leased or financed.

Personal Injury Protection

Personal injury protection coverage is also known as PIP or “no fault” auto insurance and is mandatory insurance coverage in 14 states.

Personal injury protection pays for medical expenses related to an accident regardless of who caused the accident. It is also used to pay for rehabilitation, legal and lost wage expenses.

Gap Insurance

Gap insurance is insurance that is applied when your car is damaged beyond repair and is declared a total loss.

When a total loss occurs, you are paid for the value of the car at the time of the loss, which is usually significantly lower than your auto loan or lease amount.

However, you are still held financially responsible for the entire amount of your loan or lease amount regardless of whether or not the car is actually useable.

Gap insurance pays the difference between the amount of the total loss and the amount due on your auto finance agreement.

Underinsured/Uninsured Motorist Coverage

Although liability insurance is required in almost every state, there are still many drivers who operate illegally and do not have the required auto insurance.

Additionally, since required liability coverage limits are very low, if someone only has the mandatory liability auto insurance coverage in place, there is a strong possibility that expenses related to an accident will far exceed the amount of insurance they have in place.

Underinsured and uninsured motorist insurance coverage provides protection for you if you have an accident that is caused by someone with inadequate insurance.

Your expenses are paid directly by your own insurance company and they take the legal steps necessary to recover their losses from the other driver.

With a good understanding of basic auto insurance, it becomes much easier to compare the different types of coverage. The ultimate goal of any auto insurance is to provide you with as much financial protection as possible if you are involved in an accident.

Our FREE auto insurance comparison tool helps you find the best policy for you and your family. Enter your zip code in the box below to get started now!


  1. https://en.wikipedia.org/wiki/Liability_insurance
  2. https://www.allstate.com/auto-insurance/collision-coverage.aspx
  3. https://www.kbb.com/
  4. https://www.geico.com/claims/claimsprocess/total-loss-process/
  5. http://www.iii.org/articles/can-i-drive-legally-without-insurance.html

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