Types of Car Insurance: What Each Coverage Covers and Costs

Car insurance in the United States falls into six core coverage types: liability, collision, comprehensive, uninsured/underinsured motorist, medical payments (MedPay) and personal injury protection (PIP). Every state requires at least liability coverage. Collision and comprehensive coverage are required when your vehicle is financed or leased. The remaining types are optional in most states, but can protect you from high out-of-pocket costs after an accident.

This page covers all six types of car insurance coverage, explains what each one pays for, and includes cost data from our analysis of rates from major U.S. insurers across all 50 states and Washington, D.C.

 Cost data sourced from our analysis of more than 1.5 million quotes from major U.S. insurers across all 50 states and Washington, D.C. Annual figures reflect average U.S. driver profiles and will vary based on state, vehicle and driving history. Read our full methodology to learn more.

At $25 to $100 a year, MedPay costs less than a typical ER copay and covers your full health insurance deductible after a single accident. It's also the least expensive coverage type on this list.

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). Non-standard policy types cover less common needs, such as classic cars, rideshare driving and pay-per-mile plans.

Liability insurance pays for injuries and property damage you cause to other people in an accident. It does not cover your own vehicle or your own medical bills. It covers only the costs you owe to others.

Two types make up liability coverage:

• Bodily injury liability pays for others' medical expenses when you're at fault.
• 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.

Liability-only policies cost $300 to $600 per year for most drivers. How much you pay for liability car insurance depends on your state, driving record and coverage limits.

Do you need it? Yes, this is the most important coverage if you cause an accident. Every state except New Hampshire requires drivers to carry at least a minimum amount of liability coverage, and lenders require it as part of any financed or leased vehicle agreement.

Some states let you choose between full and limited tort, which affects your right to sue after an accident. MoneyGeek's full vs. limited tort guide covers how each option affects your claim rights by state.

Collision coverage pays to repair or replace your vehicle after an accident, whether you hit another car, a guardrail or a stationary object, regardless of who was at fault. It applies to your car only. It doesn't cover the other driver's vehicle. Lenders and leasing companies almost always require collision coverage until the loan or lease is paid off.

Collision pays out based on your car's actual cash value (ACV), which is its market value at the time of loss, adjusted for depreciation, not the original purchase price. If your car's ACV is lower than the repair cost, the insurer may declare it a total loss and pay the ACV instead.

If your car is worth less than $5,000 and you could pay to replace it out of pocket, dropping collision coverage can save $400 to $800 per year.

Do you need it? Lenders require comprehensive and collision coverage if you finance or lease your vehicle, and recommend it if you live in high-theft or severe-weather areas.

Check your declarations page to know if your policy has full coverage.

Comprehensive car insurance pays for damage to your car from causes other than a collision, including theft, vandalism, fire, hail, flooding, falling objects and animal strikes. Lenders and leasing companies require comprehensive coverage, just as they require collision. Comprehensive also has a deductible you select when you buy the policy.

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.

This type of insurance doesn't cover mechanical breakdowns, normal wear and tear or personal belongings stolen from your car.

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.

Uninsured motorist coverage (UM/UIM) pays your medical bills, lost wages and related expenses when an at-fault driver has no liability insurance. Underinsured motorist (UIM) coverage applies when the at-fault driver has insurance but the policy limits are too low to cover your total costs. According to the Insurance Information Institute, about 14% of drivers nationwide are uninsured.

Most states that require UM/UIM coverage set minimums that mirror their liability minimums. Some states require it. Others make it optional. UM/UIM is one of the least expensive coverages you can add, averaging $100 to $300 per year, per MoneyGeek's analysis of rates from major insurers.

Do you need it? UM is required in 22 states, but recommended everywhere. About 1 in 8 drivers on the road carry no insurance at all, and in some states, more than 20% are underinsured. UM/UIM is one of the cheapest coverages you can add.

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. You're only required to have MedPay in New Hampshire if you buy insurance there. Car insurance is optional in the state. We recommend MedPay if you lack health insurance or have very high health insurance deductibles.

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? In no-fault states, PIP is usually required by law and replaces your right to sue for minor injuries. In states where it's optional, PIP is worth adding if you want more injury protection than MedPay offers, especially if you need coverage for lost wages.

Most drivers need at least liability coverage as it's legally required in 49 states. Whether to add collision and comprehensive depends on your vehicle's value and how you financed it.

• If your car is financed or leased: Your lender requires collision and comprehensive in addition to liability. Full coverage isn't optional.
• If you own your car outright: Liability is the only legal requirement, but collision and comprehensive are worth keeping if your car's value exceeds what you can afford to replace out of pocket.
• If your car is worth less than $5,000: Consider dropping collision and comprehensive and keeping liability only. The annual premium cost can exceed the payout on a low-value vehicle.

One useful benchmark to determine the right type of car insurance: if your annual collision and comprehensive premium exceeds 10% of your car's current market value, dropping them is worth considering. For most drivers with a car worth over $10,000, a solid starting policy is 100/300/100 liability, collision with a $500 deductible, comprehensive and UM/UIM. That combination runs $1,000 to $2,000 a year for most U.S. drivers, per MoneyGeek's analysis.

Uninsured motorist coverage and MedPay or PIP round out a solid policy for most drivers. Both are inexpensive relative to the protection they provide.

State minimum liability limits, especially if 25/50/25, are often too low to cover a serious accident. If you cause a crash with $80,000 in medical bills and your bodily injury limit is $50,000, you owe the $30,000 difference personally. Financial advisors and licensed agents recommend matching your liability limits to your net worth. 

Upgrading from 25/50/25 to 100/300/100 costs $150 to $300 more per year for most drivers, per MoneyGeek's analysis of rates from major insurers. At 25/50/25, that $80,000 crash leaves $30,000 as your personal out-of-pocket liability. At 100/300/100, the same crash is paid in full.

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

Most expensive:

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

Moderate cost:

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

Least expensive:

• MedPay: $25 to $100 per year
• PIP: $50 to $200 per year, varies by state
• Roadside assistance: $10 to $30 per year
• Rental reimbursement: $30 to $50 per year

For most drivers, full coverage, which combines liability, collision and comprehensive, runs $1,000 to $2,000 a year, depending on your state, vehicle and driving record.

To see what full coverage costs in your state, use our car insurance calculator. For a broader breakdown, see our guide to the average cost of car insurance.

You can expand standard auto policies with optional add-ons. The table below lists common types of car insurance add-ons, what each covers and which driver profile benefits most.

Some drivers need coverage outside a standard personal auto policy. The table below lists specialty policy types and the drivers each one serves.

Car insurance endorsements let you customize your policy with add-ons or changes to standard terms.

Car insurance is a contract between you and your insurer. You pay a premium, monthly or semi-annually, and the insurer agrees to cover specific types of losses up to your policy limits. When you file a claim, the insurer evaluates the loss, applies your deductible if applicable and pays the remaining covered amount. Coverage applies only to the situations named in your policy; exclusions and per-claim and per-accident limits both apply.

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.