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Auto Insurance 101: Know the difference in your coverage

MARCH 10, 2021

Getting car insurance can seem easy enough, from the outside. But as you dig deeper into the topic, questions can surface — especially if this is your first time buying auto coverage. If you find yourself wondering what the difference is between full coverage vs. liability, you’re in good company.


There’s a big difference when it comes to liability insurance vs. full coverage. Below, we explain the difference and define terms you may see on your auto policy.


Liability Coverage – The required coverages in order to operate a vehicle in North Dakota


In North Dakota, (and all U.S. states), “Liability Coverage” is required to be placed on a vehicle in order for it to operate on public roadways. The term “Liability Coverage” is a package of different insurance. This group of coverages required in North Dakota are:


·        Bodily Injury liability insurance – This coverage protects the operator of a vehicle for injuries they may be legally liable for to another person.

·        Property Damage liability insurance – Coverage that protects the operator of a vehicle for damage to another vehicle or property they are legally liable for causing.

·        Uninsured (UM) or Underinsured motorist coverage- These coverages protect the driver and occupants of a vehicle injured by another vehicle where that vehicle does not have insurance or not enough policy coverage. Think of these coverages as a kind of protection against other drivers that may not be insured or insured enough if you are injured. It saves you having to try to collect from a person directly who may not have the assets to pay your injury claim.

·        Personal Injury Protection- If you are injured while occupying a motor vehicle, a person would get their medical bills and lost wages from the insurance policy on the vehicle you are occupying. This coverage is designed to ease the burden of getting medical bills paid as you would be dealing directly with your own company.


Minimum liability coverage, which covers you for damages and accidents you cause, is base coverage at best. But here's the good news: you’re able to increase that coverage and better protect everything that matters most. Minimum liability limits in North Dakota are $25,000 per person & $50,000 per accident for bodily injury and $25,000 for property damage. It is a very good idea to have limits at a higher level than these. For example, if you hit a new vehicle in a collision, it is likely the vehicle is worth more than your $25,000 property damage limit and could be responsible for the amount owed over your coverage. Talk to your Nodak Insurance agent about purchasing higher limits, the cost is surprisingly reasonable!


Full coverage automobile insurance

Full coverage insures you better than basic coverage. This coverage usually contains a more robust set of auto insurance policies. Together, these policies offer more complete coverage, when compared against the basic minimum insurance states require, and usually include:


·        Collision coverage – This protects your vehicle for damage to the vehicle you own and pays for its repair or if not repairable, pays you the value of the vehicle. This coverage is for when the vehicle is moving; damage by striking another vehicle or object.

·        Comprehensive coverage or Other than Collision coverage (OTC) – This coverage protects you for damage to your car that occurs, typically while your car is not being operated. Think of hail damage or the theft of your vehicle. This works the same as collision when it comes to damages, the coverage pays for the repair or the value of the vehicle if not repairable. This coverage also includes damage to the glass or windshield on your vehicle.

·        Rental Car reimbursement protection – This coverage will pay for a rental vehicle while your car is being repaired after a claim.

·        Towing & Labor – This is a broad coverage will cover if your vehicle becomes disabled and needs to be towed.

·        Gap Insurance- This coverage covers the “gap” in value of your vehicle and the amount owed on the loan or lease. While most people may not need this coverage, it could be important if you owe more on your vehicle than it is worth or have a higher lease pay-off if your vehicle is a total loss.


Most collision and comprehensive coverage constitute what would be considered “full coverage”. With these coverages, there are a couple things to remember:


·        These coverages will typically come with a deductible. A deductible is a set amount that the owner is responsible for when a vehicle is damaged. The good news is the deductible amount can be set when you purchase full coverage. A higher deductible may lower the premium you have to pay for these coverages.

·        Full coverage will likely be required if you have a loan on the vehicle. Finance institutions will want that protection against damage to the vehicle while there is a loan against it. Often you will have to provide proof of insurance when purchasing a vehicle with a loan.


With this basic knowledge, you will hopefully be able to discuss your needs with your Nodak Insurance agent. With different options and costs for levels of coverage, Nodak Insurance should easily be able to fit an auto insurance package that is affordable and fits your needs.


Nodak Insurance Company

1101 1st Ave N
Fargo, ND 58102