There are three components of auto insurance that most drivers carry: liability coverage, collision coverage and comprehensive coverage. Liability covers payments when you're at fault. If the insurance companies decide that you are at fault, your liability coverage policy will cover the cost of bodily injuries and property damage. If the insurance companies deem the other driver was responsible, his liability and collision coverage will pay for the expenses.
Liability coverage kicks in when you're at fault for the accident. There are two main components to liability auto insurance coverage: bodily injury and property damage. Your bodily injury policy covers medical payments for injuries from a collision when you're at fault for the accident. Similarly, property damage insurance pays for repairs to any property you damage. Vehicles, buildings and fences are all examples of possible property covered under this policy.
Collision coverage pays for any damage to your vehicle from an accident, regardless of who is at fault. Collision coverage kicks in when your car collides with something else, whether it be another car or a stationary object. Collision coverage will pay for repairs up to your car's current cash value. If the costs of the repairs exceed the car's total cash value, the insurance company may deem your car to be a total loss.
You can think of comprehensive coverage as the "anything else other than collision" insurance category. Other drivers don't come into play with comprehensive coverage. This coverage is designed for damage from some other source. Comprehensive insurance coverage kicks in if your vehicle is damaged from a fire, natural disaster, vandalism, theft, falling object, or hitting an animal while driving. Like collision, comprehensive only pays out to the extent of your car's value. If the costs exceed the value, the insurance company will offer you a payment for your car value less the amount of your deductible.
Some states maintain no-fault insurance laws regarding auto accidents. If you're in a state with no-fault insurance laws, you don't have to worry about who is at fault for the accident -- you're automatically reimbursed for damages as long as you have the applicable insurance coverage. No-fault insurance coverage means you don't have to waste your time chasing down the other person's insurance company to get reimbursed, and vice versa.
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