What the coverages in your auto policy mean

An auto policy is a set of separate coverages, each with its own limit, and the declarations page lists them line by line. Some of the coverages pay other people when you cause an accident, and some pay for your own car and your own injuries.

The coverages, line by line

Liability

Bodily injury liability protects you against claims from people injured in an accident you cause. Property damage liability pays for the damage you cause to other people's property, such as their car or a fence. Neither one pays for your own car.

Collision and comprehensive

Collision pays for damage to your car when it hits an object, such as a tree or another car. Comprehensive pays for damage from almost everything else, including fire, severe weather, vandalism, floods, theft and broken glass. Collision is optional, but a lender or a leasing company may require it. A deductible applies to each claim on your own car, and you pay it before the coverage does.

Uninsured motorist

Uninsured motorist coverage protects you directly, as the policyholder. It pays if you are injured by a hit-and-run driver or by a driver with no insurance.

The optional lines

Medical payments, rental reimbursement, and towing and labor are optional coverages.

The limits column

Beside each coverage, the declarations page lists its limit, the most the insurer pays on that line. If a judgment or settlement against you is larger than your liability limits, you pay the difference.

No-fault and tort

Under a no-fault system, your own insurer pays you directly for your injuries, whoever caused the accident. Under the tort system, the basic coverages are bodily injury liability, property damage liability and uninsured motorist coverage.

What sets the price

The single greatest influence on a policy's price is claim frequency, meaning how often drivers like you file claims. Age matters because some age groups have more claims. Luxury and sports cars average more claims than other cars, and urban areas have more claims than rural ones. Drivers with past violations or accidents are rated as a higher risk.

Discounts go to drivers the insurer sees as a lower risk. Common ones cover more than one car on a policy, a home and auto bundle, and low mileage. Others go to drivers with driver education, students with good grades and cars with safety or anti-theft devices.

An annotated example

What to do next

Find the declarations page for each car, from the insurer's app or the renewal packet. Read down the coverage column and match each line to the descriptions above. Keep a copy of the page in the car's record.