Types of Car Insurance Coverage: An Expert Guide (2023)

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 coverages you may need.

For example, while most states require at least some car insurance coverage to drive legally, and this mandatory insurance is cheap car insurance to purchase, it doesn’t include much protection for your vehicle.

Keep reading as we dive into the different types of car insurance coverage and see which coverages you should have on your policy. Then, you can use our free quote comparison tool to ensure you get the cheapest rate on the best auto insurance coverages. 

Commonly Required Types of Car Insurance

The majority of states mandate drivers to possess a minimum level of car insurance, but each state establishes its unique set of regulations regarding car insurance, and the obligatory protections differ. This can create complexity in determining the essential coverages, including the named driver, that you should secure and those that you might consider omitting.

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

Read more: Does car insurance cover damage caused by landslides or mudslides?

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.

Read more: Does my car insurance cover damage caused by a lightning strike?

Liability Car Insurance 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 (BIL) coverage car insurance company.

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 Car Insurance 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.

Read more: Does my car insurance cover damage caused by a runaway vehicle?

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 company.

Comprehensive Car Insurance 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

Read more:

• Does my car insurance cover damage caused by a tornado or other windstorm?
• Does car insurance cover damage caused by a collision with an animal if I only have liability coverage?
• Does my car insurance cover damage caused by a deer or other wildlife?
• Does my car insurance cover damage caused by a hailstorm or heavy rain?

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 company.

Uninsured/Underinsured Motorist Car Insurance 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 and can be found at the best uninsured motorist (UM) coverage car insurance company.

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. 

Medical Payments Car Insurance 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 (MedPay) coverage car insurance company. 

Personal Injury Protection (PIP) Car Insurance 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.

Learn more: Best Personal Injury Protection (PIP) Coverage Car Insurance Company

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. 

Optional Types of Car Insurance Coverage

In addition to these main types of auto 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 car insurance coverage: 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 car 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: The best insurance for SR-22 coverage 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 to Decide What Types of Car Insurance Coverages 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.