Auto insurance policies can contain several numbers that affect what a policyholder pays after an accident or other covered event. Two important concepts are deductibles and coverage limits.
What is a deductible?
A deductible is the amount the policyholder may pay toward a covered claim before the insurer pays the eligible remainder, subject to policy terms. Some types of coverage may have different deductibles.
What is a coverage limit?
A coverage limit is the maximum amount an insurer may pay for a covered loss under a particular coverage. Limits can apply per person, per accident, per vehicle, or by another structure depending on the policy.
Liability versus physical damage
Liability coverage is generally designed to address certain claims involving injury or property damage to others when the insured is legally responsible. Collision and comprehensive coverage can address damage to the insured vehicle when the relevant coverage applies.
Why limits matter
A policy with a very low premium may have lower limits or higher deductibles. Compare the actual protection rather than assuming two policies are equivalent because their prices look similar.
Ask about exclusions
Read the policy for excluded drivers, uses of the vehicle, geographic restrictions, and other conditions that can affect a claim.
Final takeaway
When comparing auto insurance, review deductibles, liability limits, vehicle coverage, exclusions, assistance benefits, and the total premium together. The cheapest policy is not always the policy with the protection you actually need.