Bodily injury liability covers you for injuries to someone else and property damage liability covers you for damage to someone else’s property, when your auto is in an accident in which you are found liable. Coverage can be purchased in either “split limits” of 15/30/5 (as above) or in a “combined single limit” policy of $35,000.
A split-limits policy with BI of $100,000 / $300,000 and PD of $50,000 will pay out as follows:
A combined single limit (CSL) policy of $300,000 pays as follows:
You can use the lump sum ($300,000) for whatever you need. More to property damage or one person – no problem. A slightly higher premium (typically 5%) but it can be beneficial
Note: In each case, the limits do not apply to legal defense, which is furnished in addition to your regular limits.
This is often called or referred to as “full coverage” which is a very misleading term. Actual full coverage would include Uninsured Motorist, Medical Payments along with the Physical Damage and optional Rental and Towing coverages.
Physical damage insurance consists of collision and comprehensive coverage.
Collision pays for damage to your auto caused by a collision with another vehicle or with any other object (i.e. a pole, a wall, etc.), regardless of who was at fault. It also covers damaged caused by the upset (overturning) of your auto.
Comprehensive pays for damage to your auto caused by reasons other than collision, such as fire, theft, windstorm, flood, etc.
These coverages are usually offered with various types of deductibles.
Physical damage coverage is not required by law. However, if you are financing your vehicle, your lender will require it. Your loan contract will usually state that proof of insurance must be given to the lender or else they would add their own policy . The cost of the lender’s policy is usually higher than a policy you can purchase on your own and is added onto your loan payments. Also, the lender’s policy does not provide you with liability coverage. Which you are required to carry by law.
If your vehicle is over 10 years old, the cost of the insurance may be more than the auto’s actual value. Find out what your auto is actually worth and then decide if you want to insure for comprehensive and collision.