Types of Car Insurance Coverage

If you don’t know where to start with auto coverage for your , the best place to start with learning the car insurance basics.

See what coverage your state requires to see how much auto insurance you should have. You must purchase the coverages your state requires to drive legally. Then, you can build out your auto insurance policy beyond your state’s requirements based on your coverage needs and budget.

Read on to learn about the different types of auto insurance coverage. We will go over all the basic coverages you’ll need and some add-on auto insurance coverages you may want to round out your policy.

Most Common Types of Car Insurance

States or lenders require the coverages we’ll review below, so you must carry one or more of the auto insurance coverages below. For example, almost every state requires drivers to have liability auto insurance, while other states will require uninsured or underinsured motorist insurance as well.

Collision Car Insurance

If you need to know how much car insurance covers in an accident, you should take a look at collision insurance. Lenders require collision car insurance if you have a lease or loan on your vehicle, but states don’t require this coverage. Nevertheless, collision insurance is valuable coverage for most drivers, even if there is a higher cost between a full coverage policy — consisting of liability, collision, and comprehensive insurance — and minimum liability insurance, as you can see from the table below.

Average Monthly Rates for Collision, Comprehensive, and Full Coverage Car Insurance

What does car insurance cover if you have collision coverage? If you cause an accident, you will have to pay for your vehicle repairs unless you have collision insurance. If you have collision insurance, it will pay for your car’s repairs up to your policy’s limit if you crash into another car or an object, such as a telephone pole or mail box. So even if you don’t have a lease or loan on your vehicle, you should consider paying more for collision insurance if you can’t pay out of pocket for repairs.

Comprehensive Auto Insurance

Comprehensive auto insurance is another coverage that states don’t require, while lenders do. Like collision auto insurance, we also recommend getting comprehensive auto insurance even if it isn’t required. To get the best rates, compare quotes for the best cheap comprehensive car insurance coverage.

How does auto insurance work if you have comprehensive coverage? Comprehensive insurance will cover repairs up to the policy limit for a variety of situations, such as the following:

• Animal collisions
• Falling objects
• Natural disasters
• Theft or vandalism
• Weather

Basically, almost everything outside of colliding with another vehicle or object is covered by comprehensive insurance. So whether you hit a deer or a tree branch falls on your car, comprehensive insurance covers it.

Liability Auto Insurance

Almost every state requires a minimum amount of liability car insurance coverage. In the few states where it’s optional, drivers must provide proof of sufficient funds to pay for other drivers’ accident bills, which is usually a very high amount.

What does car insurance do if you only have liability coverage? Liability insurance consists of two components: bodily injury liability insurance and property damage liability insurance. These components will pay for other drivers’ bills if you cause an accident. Bodily injury liability insurance will pay for their medical bills, whereas property damage liability insurance will pay for their repair bills.

Remember that liability insurance will only cover the other parties’ bills up to the policy limit. In most states, the required liability limits are on the lower side, so if you can afford to do so, we recommend carrying more than most states require.

Medical Payments (MedPay) Auto Insurance

MedPay is required in some states, providing drivers with extra medical coverage. No matter who caused the accident, if you or your passengers get injured in a car crash, MedPay will help cover your bills.

The limit on required MedPay is usually low, such as $5,000, since this coverage should be supplemental to health insurance. MedPay is just extra padding for severe accidents to help those injured in a car crash.

Personal Injury Protection (PIP) Auto Insurance

Personal injury protection insurance coverage is very similar to MedPay, and some states require it, also. Check with your DMV to see if you need to buy PIP insurance. Regardless of who caused the accident, PIP will help cover your medical bills if you or your passengers get injured in a crash.

However, PIP is different from MedPay in that it also helps cover costs besides medical bills as you get back on your feet, such as funeral costs, child care costs, and lost wages.

Uninsured/Underinsured Motorist Auto Insurance

Insurance companies may sell uninsured and underinsured motorist coverages separately or together, and your state may require one or both. Uninsured motorist insurance will help cover your accident bills if the driver who crashed into and caused the accident doesn’t have auto insurance.

Likewise, suppose the driver who crashed into you doesn’t have a high enough insurance limit to pay off most of your accident bills. In that case, underinsured motorist auto insurance will help cover the rest of your bills.

Both these coverages are great to have if you live in a state with a high number of uninsured or underinsured drivers, even if your state doesn’t require these coverages. That way, you aren’t stuck paying for repair bills in an accident you didn’t cause. If you’re wondering “does insurance cover a hit-and-run?” The answer is yes if you have Uninsured motorist coverage.

Other Types of Auto Insurance Coverage

There are plenty of other types of auto insurance coverage that you can add to your insurance policy. Of course, not all of the add-on coverages we go over will be available at your insurance company. Still, every insurance company generally offers some additional coverages beyond just the basics.

• Gap auto insurance: If your car gets totaled, gap insurance will help pay the difference between your car’s depreciated value and the amount left on your lease or loan.
• Mechanical breakdown auto insurance: Mechanical breakdown insurance will help pay for replacements or repairs to mechanical parts in your car, similar to a warranty.
• Modified auto insurance: If you have made expensive modifications to your car, such as a customer paint job, modified car insurance will help cover the cost of repairs or replacement.
• Non-owner auto insurance: If you don’t own a car but frequently borrow from someone else, non-owner auto insurance will provide you with auto insurance when you drive someone else’s car. Read our article about non-owners car insurance coverage to learn more.
• Rental reimbursement auto insurance: If your car is in the shop for a long period after a covered claim, rental reimbursement insurance will help cover the cost of a rental car until your car gets fixed.
• Roadside assistance auto insurance: Rental reimbursement usually assists with a wide range of mishaps, from running out of gas to a dead battery.
• Umbrella auto insurance: Umbrella auto insurance provides extra liability insurance if you cause an accident that exceeds your normal limit or you get sued after an accident.

While adding these coverages will raise your monthly rate, they can be well worth it. For example, if your car is prone to breaking down periodically, paying for roadside assistance can more than pay itself off after a few breakdowns.

Speciality Auto Insurance Types

You may also see a few other terms at your auto insurance company that aren’t really coverages but specialty policies or certificates. They are as follows:

• Classic car insurance: Classic car insurance is for vehicles 25 years or older used for hobbies, such as driving to a car show on the weekend. Check out our list of the best classic car insurance if you need classic car insurance.
• SR-22 auto insurance: SR-22 insurance is a certificate proving that high-risk drivers have the required auto insurance at their company. If you need an SR-22 certificate, our article about the top SR-22 auto insurance quotes offers more information.
• Usage-based auto insurance: Usage-based auto insurance is a special type of policy that charges you based on how much you drive.

If you drive less than 10,000 miles a year, consider looking into a usage-based auto insurance policy, as it can offer significant savings on car insurance.

Read more: Car Insurance Glossary: Common Terms to Explained

The Final Word on Types of Auto Insurance Coverages

Every driver must carry their state-required auto insurance coverages but can choose what other coverages they want beyond that if they don’t have a lease or loan on their vehicle (read our full “Leasing vs. Buying: Which is better?” for more information). We highly recommend most drivers consider collision and comprehensive auto insurance in addition to their state’s coverage for a full coverage policy.

You can use our free quote comparison tool to ensure you find the best deal on your auto insurance coverages. It will help narrow down the auto insurance options in your area based on your coverage needs and driving records so that you can find the best rate.