Types of Car Insurance Coverage: An Expert Guide (2022)

Figuring out which types of car insurance coverage you need can take time and effort. In this article, we’ll break down the six most common types of coverage and additional coverage you may need.

While most states require at least some car insurance coverage to drive legally, each state determines which coverages and limits are mandatory. In addition, mandatory coverage typically doesn’t include any protection for your vehicle.

Keep reading as we dive into the different types of car insurance coverage and see which ones you should have on your policy.

What are the most common types of car insurance?

Most states require drivers to have at least a minimum amount of car insurance. However, each state makes its own car insurance rules, and mandatory coverages vary. That can make it challenging to know which coverages you need and which ones you can skip.

But what does car insurance do? Car insurance pays for damages to vehicles, other objects, and bodily injuries that involve a vehicle.

There are six main types of car insurance coverage and various add-on coverages and features that may be useful. Where you live, and your vehicle’s make and model help determine which coverages you need.

Liability Coverage

The states that require car insurance mandate a certain amount of liability coverage. Liability car insurance pays for damages to others if you cause an accident. This type of coverage is broken into two parts.

First, bodily injury liability helps pay the medical costs of others in an accident, such as hospital visits, prescriptions, and doctor visits. Find the best bodily injury liability car insurance companies.

Next, property damage liability covers physical damage to other vehicles and objects, such as a fence or pole.

Although most states mandate liability coverage, limits are typically very low and won’t cover costs in a significant accident. As a result, experts recommend increasing limits to cover more expenses.

Collision Coverage

Collision car insurance is just like it sounds. It pays for damages to your vehicle caused by an accident. In addition, collision coverage pays for repairs if your car is damaged from hitting another vehicle, an object, or in a one-car crash.

Does car insurance cover a hit-and-run? Yes, collision coverage pays for damages to your vehicle if you’re in a hit-and-run.

Although it’s not a required coverage, drivers who drive an expensive vehicle or who can’t afford to repair their car themselves should consider adding collision coverage. In addition, drivers with a car loan or lease may be required to carry collision coverage.

Collision insurance has a deductible you must pay before coverage begins, and a collision claim may raise your car insurance rates. Find the best collision coverage car insurance companies.

Comprehensive Coverage

Comprehensive car insurance covers damage to your vehicle unrelated to an accident that is out of your control.

Comprehensive insurance covers:

• • Theft
  • Vandalism
  • Falling debris like tree limbs and hail
  • Acts of nature, including floods, hurricanes, and tornados
  • Animal damage
  • Windshield damage 

Comprehensive coverage is optional, but most lenders require it with collision coverage if you have a loan or lease. In addition, comprehensive coverage has a deductible, and filing a claim may raise car insurance rates. Find the best comprehensive coverage car insurance companies.

Uninsured/Underinsured Motorist Coverage

How does auto insurance work if someone hits you without coverage?

While around 13% of drivers nationwide don’t have car insurance, only about 20 states require uninsured/underinsured motorist coverage. This coverage pays for damages to your vehicle if someone hits you without liability coverage.

If your state doesn’t require uninsured or underinsured motorist coverage, it’s still a good idea to add it to your policy. However, even if another driver has state-required car insurance, the limits may be too low to pay for your damages.

For example, let’s say your state mandates $15,000 in property damage liability. If you’re hit by a driver carrying only the state minimum and $20,000 of damage occurs to your car, their insurance won’t cover all of your damages. Find the best uninsured motorist coverage car insurance companies.

Medical Payments Coverage

Medical payment (MedPay) insurance helps pay for medical costs related to an accident. Coverage is required in Maine, New Hampshire, and Pennsylvania but is optional in other states.

MedPay helps cover costs for you and your passengers, such as doctor visits, X-rays, and prescriptions. In addition, it pays for funeral expenses and health insurance deductibles. 

Coverage is not tied to your vehicle. So, if you’re in another vehicle, riding a bike, or even walking down the street and are hit by another car, coverage kicks in.

While MedPay coverage is typically less than $10,000, it can ease the burden of medical expenses. Even if MedPay insurance isn’t required in your state, adding it to your policy is an excellent way to supplement other insurance coverages. Find the best medical payments car insurance companies.

Personal Injury Protection (PIP) Coverage

Similar to MedPay coverage, personal injury protection (PIP) coverage helps pay for medical costs related to an accident. While PIP is optional in most states, coverage is mandatory in 12 states.

In addition to medical costs, PIP pays for related expenses, such as lost wages and childcare. Coverage is a good option for drivers who want to supplement other insurance, but it may not be necessary to carry both PIP and MedPay. Find the best personal injury protection car insurance companies.

What are other types of car insurance coverage?

In addition to these main types of car insurance coverage, most insurers offer individualized coverage for specific needs. For example, gap coverage pays the difference between what you owe on your vehicle and its worth if your car is totaled. Most lenders require gap coverage until your loan is less than the car’s value.

Additional car insurance coverages include:

• Roadside assistance. Roadside assistance provides help if you have a vehicle problem on the side of the road. Services vary but typically include towing, jump starts, fuel delivery, tire changes, and lockout services.

• Rental car reimbursement. This coverage pays for a rental car if your vehicle is being repaired from a covered claim. However, there are limits to what your insurance company pays per day and the time a rental is covered.

• Umbrella insurance. Umbrella coverage is a large bucket of liability coverage that allows drivers to use it as needed. Policies can offer around $1 million in liability coverage to protect your assets in an accident.

• Usage-based auto insurance. Usage-based insurance isn’t typically its own coverage. Instead, your insurer offers discounts based on your driving habits monitored by a telematics program. Drivers receive a discount based on safe driving.

• Mechanical breakdown insurance (MBI). Similar to an extended warranty, this type of car insurance covers mechanical failure. MBI covers specific mechanical problems with your vehicle, such as clutch or electrical system issues. 

• SR-22 insurance. SR-22 insurance is actually a form that your car insurance company submits to your state showing you have at least minimum coverage. High-risk drivers may be required to show this proof of insurance for a mandated amount of time.
• Non-owner insurance. Non-owner insurance provides liability coverage for drivers without a vehicle, including drivers who borrow cars or need proof of insurance to reinstate their driver’s license.

Some coverages, such as roadside assistance and rental car reimbursement, are only available if you carry collision and comprehensive insurance. In addition, some insurers have other specialized coverages, including classic cars, sound systems, rideshare, and new car replacement coverages.

While each coverage offers a different level of protection, car insurance rates increase with each added coverage. So, carefully consider the types of coverage that best protect you and your vehicle.

How do you determine which car insurance coverage you need?

There are a lot of car insurance coverage choices, and it can take time to determine which coverage you need. However, there are ways to figure out what you need.

First, consider your vehicle. If you have a loan or lease, you’ll probably need collision and comprehensive coverage. Also, you’ll need those coverages if you can’t afford to repair or replace your vehicle.

Then, consider your finances. More coverage equals higher car insurance rates. However, while your state minimum required coverage is your cheapest option, it probably doesn’t provide much protection. So instead, increase your coverage to your financial ability.

Finally, consider add-on coverages. For example, if you drive a classic car or can’t perform minor repairs on the side of the road, you’ll need extra coverage. Remember, these add-on coverages raise your rates, so carefully choose the coverages you need.

Final Thoughts About Types of Car Insurance Coverage

Car insurance isn’t one size fits all. Each driver has different insurance needs, and car insurance companies offer individualized policies to meet those needs.

Although there are various car insurance coverages to choose from, most states only require liability coverage. A few states also require uninsured/underinsured motorists, PIP, or MedPay coverage.

However, experts recommend full coverage, including state-mandated, collision, and comprehensive coverage. Full coverage provides the most protection for drivers and their vehicles.

In addition, most insurers offer additional coverages, such as roadside assistance, rental car reimbursement, and usage-based insurance.

Once you determine which coverage you need, shop around to find the cheapest coverage available. Each car insurance company offers different rates and coverages, so comparison shopping is essential.