The two types of insurance that we have mentioned in the title of this article are considered the two opposite extremes within the various options offered by insurance companies. They are generally your main options as well. Also, there are different levels within these. If we know these details, we can have a fairly complete idea of how the auto insurance system works as a whole.
Full insurance coverage and damages to third parties (comparative)
Insurance against damage to third parties
Auto insurance is regulated at the state level. Each of the US states has its own rules in relation to the minimum coverage that they require from their drivers.
What is insurance coverage against damage to third parties? It is the one that covers damage caused to other people or their property, always outside your car, as a result of an accident. Insurance coverage against damage to third parties is mandatory in all states, what varies is the minimum amount to pay for it.
These minimum fees are expressed in three parts, that is, three numbers. We explain them in detail below, keep in mind that understanding these issues is essential for any driver in the USA. For example, in Colorado, the legal minimums are 25/50/15:
- The first number refers to the maximum amount that your insurance company will pay for damages to each person affected by the accident.
- The second number is the maximum amount that the insurer will pay for the total damage caused in the accident.
- The third number is the maximum amount you will pay only for property damage in each accident.
In summary, in Colorado $ 25,000 is paid for physical damages to each victim, no more than $ 50,000 for all damages caused in an accident, and $ 15,000 for property losses as well.
Remember that these are the minimum quantities. It is recommended that coverage be purchased above these values. To understand each other, let’s continue with the Colorado example, if you are involved in an accident that caused $ 100,000 in physical damage to the other driver, your insurer will only cover the first $ 25,000. For the other $ 75,000, the injured party can sue you, since you are responsible for paying them. This may or may not apply in the 12 states with “No fault” regulations. (REFER TO THE ARTICLE OF THE STATES NO FAULT)
Full insurance coverage
What is called comprehensive insurance are actually two forms of coverage that rank higher than third-party damage coverage, explained above: comprehensive coverage and collision coverage.
A driver can choose to buy comprehensive insurance without necessarily having to include collision coverage, but he cannot buy the latter if he does not purchase the former. An insurance policy with coverage against all risks and against damages to third parties would be somewhere between the legal minimum and full coverage.
The coverage against all risks
Comprehensive coverage is also known as “other than collision” coverage (OTC). She covers damage to your car, which is not exactly the result of a car accident. We speak, for example, of robberies, fires, mishaps caused by the weather, that is, tornadoes, hurricanes, earthquakes, floods, among others. It must be said that insurance companies include accidents against animals in this coverage, instead of admitting them within collision insurance. This is because the comprehensive insurance is designed to cover events and / or phenomena that do not depend on the responsibility of the driver.
Collision coverage is an option that can be added to the comprehensive insurance option we discussed earlier. Although it should be noted that it becomes mandatory in the event that you still owe money from the payment of your car. Financing companies require comprehensive auto insurance from their clients.
Many people think that insuring their car or other property is an unnecessary expense. But the truth is that it has to be understood as an investment, as a financial product. You must make sure that you are not overpaying for the insurance coverage you have, even if it is full insurance coverage, against damage to third parties or any other modality. The best way to get good prices is by comparing the offers of various insurance companies on the internet. In this way, many clients will save money, and at the same time they will be able to opt for a greater number of coverages, which ultimately translates into benefits.