Types of Car Insurance: Get the Right Coverage

Car insurance includes six main coverage types plus add-ons. Some are required by law, others protect specific risks and can save you hundreds yearly.

Below are the six core coverage types every driver should know, plus the most common add-ons that expand financial protection:

• Liability coverage pays for injuries and property damage you cause to others.
• Collision coverage repairs or replaces your car after accidents, regardless of fault.
• Comprehensive coverage protects your car against theft, vandalism, weather damage and animal damage.
• Uninsured motorist coverage pays your costs when another driver hits you and doesn't have car insurance.
• Medical payments coverage (MedPay) covers medical expenses for you and passengers regardless of fault.
• Personal injury protection (PIP) is broader protection than MedPay and covers medical bills and lost wages.

Customize your policy with optional add-on coverage like roadside assistance (for breakdowns), gap insurance (for financed vehicles) and rental reimbursement (while your car's in the shop). Also learn about non-standard policy types that give you unique car insurance coverage for less common needs.

Liability insurance provides financial protection when you cause an accident by covering costs you owe to other drivers. Two types make up liability coverage:

• Bodily injury liability pays 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. The at-fault driver always covers property damage regardless of state fault laws. The last number in the limit split represents the per-accident limit.

Do you need it? Yes, this is the most important coverage if you cause an accident. It's required in nearly every state. See your state's minimum liability coverage.

💡Read More: Our guide to the cheapest liability car insurance.

Collision coverage pays to repair or replace your vehicle after an accident once you pay your deductible. For repairs, collision coverage pays costs in full. For total losses, you receive your vehicle's actual cash value minus the deductible. Collision and comprehensive coverage added to liability insurance create "full coverage."

Do you need it? Almost all drivers need collision coverage because it protects your car. Collision coverage is required by lenders if you finance or lease your car. Drop collision coverage on older cars worth less than $5,000 because the cost adds up over time to exceed your car's value.

💡Read More: See our guides to collision car insurance and when you should drop collision and comprehensive insurance.

Comprehensive insurance pays for vehicle damage from theft, vandalism, weather and natural causes like animals or falling trees. Like collision, comprehensive insurance pays for repairs and replacements after you pay a deductible.

Do you need it? Comprehensive coverage is required by lenders if you finance or lease your vehicle and recommended if you live in high-theft or severe-weather areas.

💡 MoneyGeek tip: Comprehensive coverage costs less than collision because claims are less frequent. In high-theft or severe-weather areas, keep comprehensive coverage even on older vehicles.

Uninsured motorist coverage (UM/UIM) works like liability insurance but provides financial protection when the at-fault driver doesn't have insurance or enough insurance. UM/UIM pays for your bodily injuries and property damage when other drivers can't cover the costs they caused. UM/UIM also applies to hit-and-run accidents where you can't identify the at-fault driver.

Do you need it? UM is required in 22 states but highly recommended everywhere. Approximately 1 in 8 drivers don't have insurance and over 20% of drivers don't have enough insurance in some states.

💡 MoneyGeek tip: UM/UIM is inexpensive and protects you in a situation that's becoming more common.

Medical payments coverage (MedPay) pays medical expenses for you and your passengers regardless of fault, up to your coverage limit. No deductible applies.

Do you need it? MedPay is required in Maine and New Hampshire. We recommend MedPay if you lack health insurance or have very high health insurance deductibles.

💡 MoneyGeek tip: MedPay covers deductibles and copays your health insurance won't, making MedPay valuable even if you have health coverage.

Personal injury protection (PIP) is broader coverage than MedPay. PIP pays medical expenses plus lost wages from injuries up to your coverage limit. No deductible applies, and fault doesn't matter.

Do you need it? PIP is required in 15 no-fault states, which replaces the right to sue for minor injuries. In optional states, consider PIP for broader injury protection than MedPay provides, especially for lost wages coverage.

💡 MoneyGeek tip: PIP is more expensive than MedPay but offers better financial protection if you're self-employed or don't have disability insurance.

Coverage costs vary by state, driving record and vehicle, but here's how much each costs:

Most expensive:

• Collision coverage: Adds $400 to $800 annually to your premium
• Comprehensive coverage: Adds $200 to $400 annually

Moderate cost:

• Liability coverage: $300 to $600 annually for minimum limits, or more for higher limits
• Uninsured motorist coverage: $100 to $300 annually

Least expensive:

• MedPay: $25 to $100 annually
• PIP: $50 to $200 annually (varies by state depending on requirements)
• Roadside assistance: $10 to $30 annually
• Rental reimbursement: $30 to $50 annually

Read More: See our guide to the average cost of car insurance.

In addition to the main coverage options, insurance providers also offer various add-on coverages:

Separate from other standard car insurance coverage, insurers offer these optional policies:

Car insurance transfers financial risk from you to an insurer. You pay premiums, and your insurer covers eligible claims up to your policy limits.

When you buy a policy, you'll select:

• Coverage types (liability, collision, comprehensive, etc.)
• Coverage limits (how much the insurer will pay)
• Deductibles (what you pay before insurance kicks in)
• Covered drivers and vehicles

Most policies last six months and renew automatically. You can manage your policy online or through mobile apps to make payments, adjust coverage or file claims.

We answer common questions about car insurance coverage: