In addition to the main coverage options, insurance providers also offer various add-on coverages:
Auto Insurance
Types of Car Insurance Coverage
Updated: September 10, 2025
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Auto Insurance Coverage: Key Takeaways
There are six main types of car insurance coverage: liability, comprehensive, collision, Medpay, PIP, and uninsured/underinsured coverage.
Beyond basic car insurance coverage, you can add coverage options like roadside assistance, gap insurance, and rental car coverage to enhance your auto insurance policy.
The type of car insurance coverage you need depends on state requirements, your vehicle's value, your financial situation, and driving habits.
Car Insurance Coverage Types
Standard car insurance comes in six main types: liability, comprehensive, collision, uninsured/underinsured motorist, medical payments and personal injury protection coverage. Car insurance coverage protects you financially when accidents happen by paying for vehicle damage, medical bills, and legal expenses. It transfers risk from you to an insurance company - you pay premiums, and they pay for covered losses up to your policy limits. Below is a summary of what each covers:
- Bodily injury liability: Covers medical and legal costs for injuries you cause to others. In no-fault states, it may cover your own injuries. The first two numbers in the limit split represent the per-person (first number) and per-accident (second number) limits.
- Property damage liability: Pays for damage to another person’s property when you're at fault. This applies regardless of fault laws, with the at-fault driver always covering property damage. The last number in the limit split represents the per-accident limit.
Liability coverage
Liability insurance protects you if you're at fault in an accident, covering damage to other drivers. Coverage limits are often shown as a split, such as 100/300/100, representing thousands of dollars. It includes two types:
Liability coverage is required in most states and included in car insurance policies by default.
Collision insurance
Collision coverage reimburses you for repairing or replacing your vehicle after accidents, once you pay your deductible. This car insurance coverage pays repair costs in full, while total loss replacements provide your vehicle's actual cash value minus the deductible. Collision coverage works with comprehensive coverage to create "full coverage car insurance" when added to liability insurance.
When you need it: Required if you finance or lease your vehicle. Consider dropping collision on older cars worth less than 10 times your deductible, since you'll pay more in premiums than you'd receive in a claim.
Comprehensive insurance
Comprehensive insurance covers damage to your vehicle from theft, vandalism, weather-related damage and other natural causes like animals or trees. It works like collision coverage and pays for car repairs and replacements from these causes after you pay a deductible.
Collision insurance is required if you finance or lease your vehicle. Consider dropping collision coverage on older cars worth less than 10 times your deductible, since you'll pay more in premiums than you'd receive in a claim.
Uninsured/Underinsured motorist coverage
Uninsured motorist coverage (UM/UIM) works like liability insurance but protects you when the at-fault driver lacks adequate insurance. This car insurance coverage pays for your bodily injuries and property damage when other drivers can't cover the costs they caused. Uninsured motorist coverage also applies to hit-and-run accidents where the at-fault driver cannot be identified.
Medical payments coverage (MedPay)
Medical payments coverage (MedPay) pays for medical expenses for you and your passengers regardless of fault, up to your coverage limit without requiring deductibles. This car insurance coverage type is required only in Maine and New Hampshire but available as optional coverage in other states. Medical payments coverage availability and limitations vary by state.
This type of coverage is useful if you don't have health insurance or have high deductibles. Also covers passengers who might not have their own health coverage.
Personal injury protection (PIP)
Personal injury protection (PIP) is a type of car insurance that offers broader protection than MedPay. It covers medical expenses plus lost wages from injuries up to your coverage limit without deductibles. This car insurance coverage applies regardless of fault in accidents. PIP coverage is available in 19 states—15 states require it, while four states offer it as an optional add-on coverage.
PIP coverage is required in no-fault states where it replaces the right to sue for minor injuries. In optional states, consider PIP if you want broader injury protection than MedPay provides, especially for lost wages coverage.
Types of Car Insurance Coverage Add-ons
Add-on Coverage Option | Details |
|---|---|
Roadside assistance | Provides towing coverage, locksmith services, gas transport and other services you may need if your car breaks down and you need assistance |
GAP insurance | Covers your loan if your car is financed in case your car is totaled up to a certain limit |
Rental car reimbursement | Covers you for rental car expenses up to a certain limit per day if your vehicle breaks down while on the road |
Accident forgiveness | Depending on the severity of an accident, your first accident may be forgiven, meaning your rates won’t increase. |
Original equipment manufacturer (OEM) | Also known as original parts replacement coverage, this ensures repairs or replacements for a covered incident include automaker parts. |
Vanishing deductible | With this add-on, your deductible for comprehensive and collision coverage decreases over time as long as you remain claim-free. |
New/Better car replacement | Allows you to replace your totaled car with a new or upgraded vehicle after a covered incident |
Protects you during covered incidents while using your personal vehicle for rideshare services | |
Trip interruption | Covers transportation, lodging and food costs up to a daily limit if your car breaks down or is out of commission |
Custom equipment coverage | Covers custom equipment or modifications to your car, providing reimbursement up to a set limit for each item if damaged |
Pet coverage | Covers vet bills up to a set limit if your pet is injured in your car |
Windshield/Glass coverage | Covers windshield replacement if it gets damaged and needs repair or needs to be replaced up to a certain amount |
Nonstandard Types of Car Insurance Coverage
Separate from other standard car insurance coverage, insurers offer these optional policies:
Nonstandard Coverage Option | Details |
|---|---|
Covers your vehicle (must be at least 20 years old) up to an agreed value and offers comprehensive protection | |
Commercial auto insurance | Offers the same protection as a traditional policy but applies only when the vehicle is used for commercial purposes |
Mechanical breakdown insurance | Similar to a car warranty, this coverage protects against unexpected part breakdowns on your vehicle. However, it typically offers less coverage than warranties from automakers or third-party providers. |
Combines a base rate, determined by your personal and vehicle details, with a premium based on your annual mileage. It works like a traditional policy but usually costs less for drivers logging fewer than 7,000 miles a year. | |
Provides liability coverage for drivers who don't own a car but drive often | |
Provides the same standard coverages as a traditional policy but applies specifically to rental vehicles. For most drivers, it supplements their standard car insurance coverage. |
How Does Car Insurance Coverage Work?
Car insurance works by transferring financial risk from you to an insurance company through premium payments. When buying auto insurance coverage, you select your coverage types, coverage limits, deductibles, and covered drivers and vehicles. Car insurance coverage for medical expenses has dollar limits, while vehicle damage coverage pays repair costs in full after you pay your deductible.
Auto insurance coverage typically lasts six months with renewal options, though some insurers offer annual terms. After purchasing a car insurance policy, you can manage it online or through mobile apps to make payments, adjust coverage, or file claims.
How Do Car Insurance Claims Work?
Here’s a summary of the claims process with clear steps to help you navigate auto claims smoothly:
- 1
Document and report the incident
If your car is damaged or you're in an accident, document the scene with photos or videos and notify the police if possible. This helps establish proof, continuity and the cause of the incident. File a police report, either in person or online, because insurers typically require it when submitting a claim.
- 2
Prepare documentation
Gather all necessary documents and information before filing your claim. Having everything organized speeds up the process and helps ensure you don't miss important details that could affect your settlement.
Required documentation checklist:
- Police report number and copy when available
- Photos and videos of the scene and damage
- Insurance information from all parties involved
- Driver's license numbers from all drivers
- Medical records if injuries occurred
- Repair estimates from licensed shops
- Receipts for towing, rental cars and other expenses
- Witness contact information and statements
- 3
File a claim
Call your insurer first at the number on your car's insurance card as soon as possible. Most insurers have 24/7 claim reporting hotlines. Also, manage your claim through your insurer's mobile app or website to make the process simpler.
Filing process:
- Call within 24 hours of the incident (sooner is better)
- Provide your policy number and basic incident details
- Answer questions about what happened without speculating
- Get your claim number and adjuster's contact information
- Schedule a vehicle inspection if needed
- Keep detailed records of all conversations and correspondence
- 4
Understand claim terms
After filing a claim, understand the required documentation, submission deadlines and expected reimbursement timeline. This knowledge helps you plan, meet deadlines and manage your finances effectively.
Typical timeline expectations:
- Initial contact: Adjuster assigned within one to two business days
- Vehicle inspection: Scheduled within three to five business days
- Damage assessment: Completed within five to seven business days after inspection
- Settlement offer: Provided within 10 to 15 business days for straightforward claims
- Payment processing: Three to five business days after settlement agreement
- Complex claims: May take 30 to 60 days or longer depending on investigation needs
- 5
Know your dispute resolution options
If you disagree with your insurer's decision or settlement offer, you have several options:
- Internal dispute process: Request a claim review from your adjuster's supervisor. Ask for a second opinion or independent appraisal. Escalate to the insurance company's customer service department. File a formal complaint through the insurer's internal process.
- External dispute resolution: Contact your state insurance department to file a complaint. Consider hiring a public adjuster to represent your interests. Pursue mediation through your state's insurance dispute program. Consult with an attorney for potential legal action if the claim value justifies it.
- Timeline for disputes: Most internal reviews take 15 to 30 days, while state insurance department investigations can take 30 to 90 days. Keep detailed records of all communications and continue documenting your damage throughout the dispute process.
How Do Car Insurance Payments Work?
Car insurance payments are made through annual or monthly payment options. Coverage can be paid in full for the entire policy period (which typically saves money) or through monthly installment payments. Most insurance companies offer automatic payment options to ensure continuous protection.
How Switching Car Insurance Coverage Works
Switching car insurance coverage involves purchasing new auto insurance before canceling your current policy to avoid coverage gaps. When you switch car insurance companies, your new coverage begins immediately, then you cancel the old policy. You'll typically receive a prorated refund for unused car insurance coverage from your previous insurer.
How Car Insurance Coverage Works: Real World Scenarios
Scenario 1: Rear-End Collision You Cause
Sarah rear-ends another car while texting, causing $8,000 in damage to the other vehicle and $3,500 to her own car. The other driver has $2,000 in medical bills.
Coverage response: Her liability insurance covers the $8,000 property damage and $2,000 medical bills for the other driver. Her collision coverage pays $2,500 for her car repairs ($3,500 minus her $1,000 deductible). Total out-of-pocket: $1,000 deductible
Scenario 2: Hit by an Uninsured Driver
Mike's car sustains $12,000 in damage when an uninsured driver runs a red light. Mike has $5,000 in medical expenses.
Coverage response: His uninsured motorist property damage covers the $12,000 vehicle damage. His uninsured motorist bodily injury pays his $5,000 medical bills. Total out-of-pocket: $0 (assuming no deductible on UM coverage)
How Much Car Insurance Coverage Do I Need?
Car insurance coverage requirements vary by state, with each state setting minimum liability coverage amounts. If you lease or finance a vehicle, full-coverage policies including comprehensive and collision are required. Choosing the right auto insurance coverage amounts depends on your vehicle's value, assets, and risk tolerance. Use our coverage calculator tool to determine how much car insurance coverage you need.
Determine How Much Car Insurance You Need
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Different Types of Car Insurance: Bottom Line
Car insurance coverage protects you financially from unexpected accidents and damage, offering various car insurance coverage options for complete peace of mind. To choose the best auto insurance coverage, determine your coverage needs, research insurance companies and coverage costs, and then compare multiple car insurance quotes from different providers.
Car Insurance Coverage: FAQ
Here are expert answers to frequently asked questions from the MoneyGeek team:
Does my car insurance coverage extend to rental cars?
Most car insurance coverage extends to rental cars when you have full coverage including comprehensive and collision. Your auto insurance coverage typically provides the same protection for rental vehicles as for your car, but coverage limits may vary.
What car insurance coverage protects against vehicle theft?
Comprehensive insurance coverage protects against vehicle theft and damage caused by stolen vehicles. This car insurance coverage pays for your vehicle replacement if it's stolen, even if you left your keys in the car. This type of coverage is the only car insurance coverage that covers theft.
Does car insurance coverage include windshield and window damage?
Car insurance coverage for windshield and window damage depends on your type of coverage. Comprehensive coverage pays for windshield damage from weather, vandalism, or animals, while collision coverage handles accident-related window damage. Full car insurance coverage including both types protects all windshield and window damage scenarios.
What car insurance coverage protects against weather damage?
Comprehensive insurance coverage protects your vehicle against weather-related damage including hail, flooding, wind damage, fire, and other natural disasters. This car insurance coverage type is essential if you live in areas with severe weather conditions.
What car insurance coverage applies to hit-and-run accidents?
Collision or uninsured motorist property damage coverage covers hit-and-run damage to your parked car. These car insurance coverage types protect you when the at-fault driver flees the scene and cannot be identified.
Does car insurance coverage include damaged caused by animals?
Comprehensive insurance covers vehicle damage from deer, rodents and other animals.
What car insurance coverage applies to car part repairs and replacements?
Comprehensive and collision coverage pays for parts damaged in accidents or covered incidents like theft or weather. However, car insurance coverage doesn't include normal wear and breakdowns - you need a warranty for those situations.
Does car insurance coverage include mechanical breakdowns?
Standard car insurance coverage doesn't include mechanical failures or breakdowns unrelated to accidents. Auto insurance coverage only pays for mechanical damage caused by covered incidents like collisions or comprehensive claims. For mechanical breakdown protection, you need separate coverage or an extended warranty.
Is lost key replacement included in car insurance coverage?
Car insurance coverage doesn't include lost or misplaced keys. Auto insurance coverage only pays for keys damaged or stolen during covered incidents like break-ins. You need a separate key replacement plan from your dealer or insurance company for lost key protection.
What car insurance coverage protects against vandalism?
Comprehensive insurance coverage protects against vandalism including keying, graffiti, broken windows, and other intentional damage to your vehicle. This car insurance coverage type handles all non-collision damage to your car.
What car insurance coverage pays for medical expenses?
Several types of car insurance coverage pay medical expenses depending on the situation. Personal injury protection (PIP) and medical payments (MedPay) coverage pay your medical bills regardless of fault. Liability coverage pays medical expenses for people you injure in accidents.
What car insurance coverage pays for property damage?
Property damage liability coverage pays for damage you cause to other people's property including vehicles, buildings, fences, and personal belongings. This car insurance coverage is required by law in most states and covers property damage for which you're legally liable.
Does car insurance coverage include normal wear and tear?
Car insurance coverage excludes normal wear and tear like paint fading, tire wear, or gradual deterioration. Auto insurance coverage only pays for sudden, accidental damage from covered events. You need an extended warranty or maintenance plan for wear and tear protection.
What is basic car insurance coverage?
Basic car insurance coverage typically includes liability insurance required by your state, which pays for damage you cause to others. Many drivers add comprehensive and collision coverage to create full basic coverage that protects their vehicle.
How many types of car insurance coverage are there?
There are six main types of car insurance coverage: liability (required by law), comprehensive and collision (protect your vehicle), medical payments and personal injury protection (cover medical costs), and uninsured motorist coverage (protects from uninsured drivers).
What are the different types of car insurance coverage?
The different types of car insurance coverage serve specific purposes. Liability covers damage you cause others, comprehensive covers theft and weather damage, collision covers accident damage, medical payments covers injury expenses, and uninsured motorist covers gaps when other drivers lack insurance.
What types of car insurance coverage do I need?
The types of car insurance coverage you need depend on your state requirements, vehicle value, and financial situation. All drivers need liability coverage, while financed vehicles require comprehensive and collision coverage. Consider adding medical payments and uninsured motorist coverage for complete protection
What's the difference between comprehensive and collision coverage?
Comprehensive coverage protects against theft, vandalism, weather damage, and animal strikes, while collision coverage pays for damage from accidents with vehicles or objects. Both types of car insurance coverage work together to protect your vehicle from different types of damage.
Is full coverage car insurance worth it?
Full coverage car insurance, combining liability, comprehensive, and collision coverage, is worth it if your vehicle is financed, leased, or worth more than you can afford to replace. This car insurance coverage protects both your legal liability and your vehicle investment.
What does liability coverage include?
Liability coverage includes bodily injury liability (pays medical costs for people you injure) and property damage liability (pays for property you damage). This basic car insurance coverage is required in most states and protects you from financial responsibility for accidents you cause.
When do I need comprehensive car insurance coverage?
You need comprehensive car insurance coverage if you finance or lease your vehicle or want protection from theft, vandalism, weather damage, and animal strikes. This coverage is valuable for newer vehicles or those living in high-risk areas.
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About Mark Fitzpatrick
Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. With over five years of experience analyzing the insurance market, he conducts original research and creates tailored content for all types of buyers. His insights have been featured in publications like CNBC, NBC News and Mashable.
Fitzpatrick holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He's also a five-time Jeopardy champion!
Passionate about economics and insurance, he aims to promote transparency in financial topics and empower others to make confident money decisions.
sources
- Insurance Information Institute. "Background on: Compulsory Auto/Uninsured Motorists." Accessed February 18, 2025.