What Does Auto Insurance Actually Cover?

By Brad Davis, CIC (January 19, 2026)
Davis Insurance Associates – Myrtle Beach, South Carolina

Auto insurance is one of those things most people have, but few people truly understand. You pay the bill, keep the card in your glove box, and hope you never need it. But when an accident happens, that’s when the questions start.

What does my auto insurance actually cover?
What does it not cover?
And why do people have such different experiences after a wreck?

Let’s break it down in simple terms, with real-world examples, so it actually makes sense.

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The Big Picture

Auto insurance generally does three main things:

1. Pays for damage or injuries you cause
2. Pays for damage to your own vehicle
3. Protects you when the other driver doesn’t have enough insurance

Your policy is made up of different “parts,” each with a specific job. Of course there are other coverages offered by various Auto Insurance Companies (such as Rental Reimbursement, Towing or Roadside Assistance, GAP or Lease Loan Payoff, Mechanical Breakdown, Pet Injury, Funeral Benefit, and more), but this blog is written to cover the basics.

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Liability Coverage

Liability coverage pays for damage or injuries you cause to others.

This includes:

• Other people’s medical bills
• Damage to other vehicles
• Damage to property (fences, buildings, light poles, etc.)

Example:

You’re driving down Highway 17 in Myrtle Beach, look down for a second, and rear-end another car. The driver needs medical treatment and their car is totaled.

Your liability coverage pays for their injuries and their car, not yours.

This is required by law in both South Carolina and North Carolina, but the minimum limits are often far too low for today’s medical and repair costs.

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Collision Coverage (Your Car, Your Fault)

Collision coverage pays to repair or replace your vehicle after an accident, typically used when it is your fault.

Example:

You slide on a wet road during a summer storm and hit a guardrail. No other cars are involved.

Collision coverage pays to fix your car, minus your deductible.

No collision coverage? You’re paying out of pocket.

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Comprehensive Coverage (The “Other Stuff”)

Comprehensive coverage pays for damage that is not caused by a collision.

This includes:

• Theft
• Fire
• Vandalism
• Falling objects
• Hitting a deer
• Storm damage (very relevant on the coast)

Example:

A hurricane rolls through the Grand Strand and a tree limb falls on your parked car.

That’s comprehensive coverage, not collision.

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Medical Payments or Personal Injury Protection

Depending on the state and policy, this coverage helps pay for medical bills for you and your passengers, regardless of fault.

Example:

You’re in a minor accident in Conway. No one is seriously hurt, but you visit urgent care.

This coverage can help pay those bills without waiting on the other driver’s insurance.

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Uninsured & Underinsured Motorist Coverage (Often Overlooked & Important)

This may be the most misunderstood coverage on an auto policy.

Uninsured Motorist (UM) covers you if the at-fault driver has no insurance.
Underinsured Motorist (UIM) covers you if they don’t have enough insurance.

Example:

You’re hit by another driver in North Myrtle Beach. They carry only the state minimum limits, which aren’t enough to cover your medical bills.

Your UIM coverage can step in to protect you and your family.

This coverage is especially important in the Carolinas, where uninsured and minimally insured drivers are common.

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What Auto Insurance Does NOT Cover

This is just as important to understand.

Auto insurance generally does not cover:

• Normal wear and tear
• Mechanical breakdowns
• Using your vehicle for business without proper coverage
• Items stolen from inside your car (that’s usually homeowners or renters insurance)
• Injuries or damage beyond your policy limits

Insurance is a safety net, not a blank check.

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Why Two People Can Have the Same Accident and Very Different Outcomes

Here’s the truth most people don’t realize:

Two drivers can be in nearly identical accidents and walk away with very different financial results, depending on how their policies are set up.

Coverage limits, deductibles, and optional protections matter – a lot.

That’s why working with a local, independent insurance agency matters. Not all policies are built the same, even if the price looks similar.

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Final Thoughts

Auto insurance isn’t just about checking a box or finding the cheapest price. It’s about protecting yourself, your family, and your financial future when something unexpected happens.

If you drive in Myrtle Beach or anywhere in the Carolinas, understanding what your auto insurance actually covers, and what it doesn’t, is one of the smartest things you can do.

If you’re not sure how your policy is set up, ask questions now. It’s much easier than learning the hard way after an accident.

👉 Ready to START AN INSURANCE QUOTE?

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Additional Resources

What is Auto Insurance from SC Department of Insurance.

What is Auto Insurance from NC Department of Insurance.

This article is meant to provide general information and does not replace the actual terms, conditions, or exclusions found in your insurance policy.