What is covered in a standard auto insurance policy is a matter of the definition of “standard.” If you mean a minimum liability policy that only provides what’s mandated by state law, that’s one thing. But if you include collision and comprehensive coverage, based on the fact that most people have car loans, that’s a completely different thing. We’ll deal with both in the course of this article.

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For the purposes of this article we will define a standard auto insurance policy in one of two ways. The first is the typical policy taken out by an individual with an inexpensive vehicle that does not need collision, comprehensive, or other additional coverage. The other standard policy is one typically taken out by an individual who has an outstanding car loan, in amounts sufficient enough to cover accidents or other types of damage.

What is covered on a standard liability policy?

Liability policies are designed to cover victims of an accident caused by you. Each state has its own requirements for minimum liability, usually expressed in a three-number formula that looks something like Pennsylvania’s 15/30/5. The Pennsylvania Insurance Department’s list of required coverage in the state defines those numbers as representing $15,000 to pay for the injuries of one person, $30,000 to pay for the injuries of multiple persons, and $5,000 to pay for damages caused to another person’s property. Although amounts vary from state to state, the categories of liability insurance are pretty consistent throughout.

It’s important to note that minimum liability insurance does not cover damage to your own car. It also does not cover your medical expenses or those of your passengers. Those expenses will typically be covered by your own health insurance or extra personal injury protection (PIP) coverage you may decide to carry.

If you want coverage to protect damage done to your car, you’ll need to add collision and comprehensive coverage. If you want protection against glass damage, fire, and theft, you’ll need even more extra coverage.

What is covered on a standard collision and comprehensive policy?

Standard collision and comprehensive policies also have minimum liability built-in due to state mandates. This extra coverage then pays for damage to your car in any number of circumstances. To understand how this works it’s important to define the two, because they are different. It’s also important to note that, if you have an outstanding loan on your car, your insurance company will probably require you to carry both.

Collision insurance pays for damage done to your vehicle as the result of an accident on a public road. Occasionally, an insurance company will include public parking lots in this coverage as well. It will pay to repair or replace your car after an accident at a value equivalent to the current NADA or Kelly Blue Book value. It does not pay for personal items in your vehicle that may have been damaged during the crash.

Comprehensive insurance pays for car damage incurred under any other circumstances. For example, vandalism is normally part of comprehensive coverage. It also takes care of damage caused by storms, acts of nature, and the like. The two exceptions to the rule here are fire and theft. Those two risks require additional coverage to be added.

Is umbrella coverage part of a standard auto insurance policy?

Umbrella insurance is a separate product that is purchased on an individual basis. Some people purchase this coverage as part of their homeowner’s policy, while others choose to do it through their auto coverage. Either way, it is basically the same product. It is designed to provide financial protection in any circumstance where your other insurance policies do not apply. Umbrella insurance also kicks in when your other applicable insurance policies have been exhausted.

A typical umbrella insurance customer is one who has valuable assets or large amounts of cash that he wants to protect. You can easily understand this if you consider a personal injury lawsuit that might result from a careless driver causing an accident. If that driver is sued by the victim of the crash for pain and suffering, medical benefits, and future lost wages, the judgment could be rather sizable.

Without umbrella insurance the driver’s assets could be seized, and his wages garnished, in order to pay the award. By purchasing umbrella insurance, a driver protects his real estate, securities, and other valuable assets.

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