Published 2026-09-19 · Last updated 2026-09-19.
Collision
Collision coverage pays to repair or replace your own car after it collides with another vehicle or an object — another car, a guardrail, a tree, a pothole — regardless of who was at fault. It pays up to your car's actual cash value, minus your deductible. Your deductible is the amount you pay first: if the repair costs more than your deductible, the insurer pays the rest up to the car's value; if it costs less, you pay the repair yourself.
Collision is optional for a car you own outright, but a lender or lessor will usually require it while a loan or lease is active. It does not pay for other people's injuries or property, it does not pay for theft or weather damage (that is comprehensive), and it does not pay your medical bills. Those limits are the point: collision is vehicle damage cover for your own car, nothing broader.
Liability
Liability coverage pays for injury and damage you cause to others when you are at fault. Bodily injury liability pays for other people's medical costs and related losses, up to your limits. Property damage liability pays for damage you cause to other people's property, most often their car, up to your limit. It does not pay for your own car or your own injuries.
Liability is the foundation of almost every car policy and is required, in some minimum form, in nearly every state. Your limits matter more than the label: a low limit can leave you personally exposed after a serious accident, because costs above your limit do not disappear — they fall to you. Choosing limits is therefore a decision about your assets, not only about your quote.
Texas note (general)
The general lesson travels: wherever you live, liability is about others, collision is about your own car, and your state's minimum is a floor, not a recommendation.
Examples
Example one: you hit another car and you are at fault. Your liability pays for the other driver's car and injuries, up to your limits. Your collision pays for your own car, minus your deductible. Example two: someone hits your parked car and drives off. Your collision can pay for your car, minus your deductible, while uninsured motorist property damage — if you carry it — may help in a different way depending on your state and policy. Example three: you hit a guardrail alone. Liability pays nobody, because no other person or property was harmed; collision pays for your car, minus your deductible.