When you own a car, you're exposed to various liabilities, from personal injuries to collisions. Some types of insurance coverage are required by state law, while others give you peace of mind if the worst happens. Securing the right car insurance coverage for your needs can help protect you, your passengers and your vehicle. Read on to understand the most common types of car insurance coverage and discover the right coverage for your situation.
Table of Contents
- 7 Types of Auto Insurance Coverage
- Liability Coverage
- Comprehensive Coverage
- Personal Injury Protection
- Collision Coverage
- Medical Payments Coverage
- Uninsured Motorist Coverage
- Gap Insurance
- More Types of Car Insurance Coverage
- Do You Need Car Insurance Coverage?
- Frequently Asked Questions
7 Types of Auto Insurance Coverage
Individual states have different insurance requirements. Find your state's requirements and then discover the seven most common types of car insurance coverage to build customized auto insurance coverage for your needs.
Liability Coverage
In most U.S. states, you'll be required to have liability coverage. Liability coverage can cover the damages from injuries to property damage of others in case you're in an accident and legally responsible for the accident. Liability coverage should protect you if you're liable for the injuries or damage. Costs range from $50 to $200 or more monthly, depending on coverage amount. Good liability coverage plans have limits of at least 100/300/100, which is how liability coverage writes limits.
The limits of coverage for liability insurance for 100/300/100 are:
- $100,000 for bodily injury to one person per accident
- $300,000 for bodily injury to more than one person per accident
- $100,000 for property damage per accident
However, you can get higher or lower coverage for your situation and state requirements, even as low as 15/30/5. Learn more about third-party liability insurance here.
Comprehensive Coverage
Comprehensive coverage is an optional coverage that you can add to other car insurance. It covers damage to your car from non-accident-related issues like vandalism or theft, animal damage and natural disasters like fire, hail or flooding.
Comprehensive coverage helps to repair or replace the vehicle, up to the vehicle's cash value, in case a covered peril damages it. Most comprehensive coverage has a deductible, which you'll pay out of pocket before insurance covers any remaining costs. Some lenders require comprehensive coverage if you lease a vehicle or have an auto loan.
Personal Injury Protection
Personal injury protection, commonly abbreviated as PIP, is a type of auto insurance that's not available in all states. PIP can help pay for your medical expenses in case you're in an accident. Most PIP plans cover expenses related to an injury or accident, like lost income or childcare costs for you and anyone involved in the accident.
Personal injury protection is required in some states and optional in others. In states where it's required, there is usually a required minimum. For example, in Florida, you must have a minimum personal injury protection policy of $10,000. In case of injury expenses higher than your maximum coverage, you'll be responsible for paying the difference out of pocket. Depending on coverage amount and location, PIP could cost as little as $19.
Collision Coverage
Collision coverage can help pay for the repair or replacement of your vehicle in case you're involved in an accident that's your fault. This can include a collision with another vehicle or an object like a fence or other stationary object.
Collision coverage pays for repair or replacement up to the vehicle's actual cash value, minus the deductible. Collision coverage is usually optional, but you may be required to get it if you are leasing a vehicle or have an auto loan. Find the best collision coverage here.
Medical Payments Coverage
Like personal injury protection, medical payment coverage covers the medical costs associated with injuries for you or passengers or family members driving the vehicle. This coverage includes the costs of hospital visits, surgery, X-rays and other expenses for you and your passengers if you're the at-fault driver. You must have PIP or medical payment coverage in the no-fault states.
Uninsured Motorist Coverage
Uninsured motorist coverage covers medical expenses and insurance for you and your passengers if an uninsured driver is responsible for the accident. In some cases, it also covers vehicle damage.
Uninsured motorist coverage is required in certain states. If you get uninsured motorist coverage, it covers you and your passengers, not the expenses for uninsured drivers. It could cost as little as $17.
Coverage may include:
- Medical bills of you and your passengers
- Lost wages from injuries from a car accident
- Funeral expenses
- Car damage in some states
Gap Insurance
Gap insurance covers the difference between the car’s value and what you owe on the loan. A gap in coverage from your primary insurance can be frustrating, especially if your car is totaled. That's where gap insurance comes in. If your car's value was $18,000 but you have an outstanding loan balance of $22,000, the gap is $4,000. Gap insurance covers the difference. Gap insurance is typically a lump sum payment of $500-$700, spending on your coverage and loan amount.
More Types of Car Insurance Coverage
You can consider other specific types of car insurance coverage. Here are a few specialized insurance options.
- New car replacement coverage: If your car is totaled, you'll get the funds for a new brand car of the same make and model minus any deductible. The value of the car won't be depreciated with this coverage.
- Rental reimbursem*nt or transportation expense coverage: Renting a vehicle can be costly if your car is in the repair shop. This coverage helps pay for transportation expenses while your own vehicle is being repaired.
- Ridesharing coverage: Rideshare coverage is a good idea if you use your vehicle as a rideshare driver. It protects you and your vehicle from damage or injuries while driving for a ridesharing service.
- Towing and labor cost coverage: This optional add-on to other car insurance covers the costs of towing or labor in case you're in an accident. It can help with the costs and hassles of roadside breakdowns.
- Classic car insurance: Designed specifically for classic cars, this insurance protects your vehicle with liability, comprehensive, collision and other specialized coverages for your classic car.
- Business or commercial auto insurance: Provides a variety of coverages for cars, trucks, vans and other commercial vehicles used for your business. Coverage may include physical damage insurance, collision and comprehensive coverage.
- Roadside assistance: Roadside assistance is designed to help if your vehicle breaks down. This includes physical and financial assistance with a repair in case of a breakdown.
- Mechanical breakdown coverage: Mechanical breakdown offers protection to help cover the repair costs if major vehicle systems fail.
Do You Need Car Insurance Coverage?
Car insurance coverage can protect you financially in case the worst happens. While 48 out of 50 states require liability insurance, this coverage can give you more than peace of mind. You can customize car insurance with add-ons like collision damage or comprehensive insurance, especially if you have a high-value vehicle.
How much car insurance you need depends on the vehicle's value and location and your financial situation. The national average cost of car insurance is around $165 per month. By researching options, you could save more while getting the coverage you need. To get started, find the best car insurance here.
Frequently Asked Questions
Q
Which type of insurance is required by law?
A
Liability car insurance is required by every state but New Hampshire and Virginia. Some states have additional insurance requirements by state law.
Q
Can I customize my car insurance coverage?
A
You can create customized car insurance through add-ons. Adding additional coverage can help you build an insurance policy to meet your needs.
Q
What factors can affect my car insurance coverage rates?
A
Many factors affect your auto insurance rates. Insurers weigh your driving record, age, driving experience and credit history. They also consider the car make and model, coverage selections, deductible amount, car insurance history and zip code.
When it comes to car insurance coverage, there are several types that you should be aware of. These types of coverage can help protect you, your passengers, and your vehicle from various liabilities and risks. Let's go through each type of car insurance coverage mentioned in the article and provide some information about them.
Liability Coverage
Liability coverage is a type of car insurance coverage that is required by law in most U.S. states. It covers the damages from injuries to property damage of others in case you're in an accident and legally responsible for the accident. Good liability coverage plans have limits of at least 100/300/100, which means:
- $100,000 for bodily injury to one person per accident
- $300,000 for bodily injury to more than one person per accident
- $100,000 for property damage per accident
However, the coverage amount can vary depending on your situation and state requirements [[1]].
Comprehensive Coverage
Comprehensive coverage is an optional type of car insurance coverage that covers damage to your car from non-accident-related issues like vandalism, theft, animal damage, and natural disasters like fire, hail, or flooding. It helps repair or replace your vehicle up to its cash value, minus the deductible. Comprehensive coverage is usually required if you lease a vehicle or have an auto loan [[2]].
Personal Injury Protection (PIP)
Personal Injury Protection, commonly known as PIP, is a type of auto insurance coverage that helps pay for your medical expenses in case you're in an accident. It covers expenses related to injuries or accidents, such as lost income or childcare costs for you and anyone involved in the accident. PIP is required in some states and optional in others, with each state having its own required minimum coverage amount [[3]].
Collision Coverage
Collision coverage is another optional type of car insurance coverage that helps pay for the repair or replacement of your vehicle in case you're involved in an accident that's your fault. It covers collisions with other vehicles or stationary objects like fences. Collision coverage pays for repair or replacement up to the vehicle's actual cash value, minus the deductible. Similar to comprehensive coverage, collision coverage is often required if you lease a vehicle or have an auto loan [[4]].
Medical Payments Coverage
Medical payments coverage, also known as MedPay, covers the medical costs associated with injuries for you, your passengers, or family members driving the vehicle. It includes the costs of hospital visits, surgery, X-rays, and other expenses related to injuries resulting from a car accident. This coverage is typically required in no-fault states and can be added as an optional coverage in other states [[5]].
Uninsured Motorist Coverage
Uninsured motorist coverage provides insurance coverage for you and your passengers if an uninsured driver is responsible for an accident. It covers medical expenses and, in some cases, vehicle damage. Uninsured motorist coverage is required in certain states and can be added as an optional coverage in others. The cost of uninsured motorist coverage can vary depending on your situation [[6]].
Gap Insurance
Gap insurance covers the difference between the value of your car and what you owe on the loan. It can be helpful if your car is totaled and there is a gap in coverage from your primary insurance. Gap insurance is typically a lump sum payment that covers the difference between the car's value and the outstanding loan balance [[7]].
In addition to these types of car insurance coverage, there are also other specialized options available, such as new car replacement coverage, rental reimbursem*nt or transportation expense coverage, ridesharing coverage, towing and labor cost coverage, classic car insurance, business or commercial auto insurance, roadside assistance, and mechanical breakdown coverage [[8]].
It's important to note that the specific requirements and coverage options may vary depending on your state and individual circ*mstances. To determine the right car insurance coverage for your situation, it's recommended to consult with an insurance professional or use online resources to compare different insurance providers and their offerings.
I hope this information helps you understand the various types of car insurance coverage mentioned in the article. If you have any further questions, feel free to ask!
