When you're shopping for auto insurance, all the different terms and types of car insurance can get confusing. It's important to understand them all so you can find the right coverage for your needs.
Use this guide to learn about the different types of car insurance coverage options, from comprehensive and collision coverage to roadside assistance.
Understanding Car Insurance Basics
Car insurance is a form of financial protection against losses from damage to your vehicle or damage you cause to others in an accident. Almost every state requires drivers to carry some amount of auto insurance. However, no matter where you live, you're not required to purchase every type of car insurance.
Learning the differences between the different types of insurance for cars will make it much easier to choose your auto insurance policy.
Liability Insurance
Liability car insurance protects you when you're at fault in a car accident and cause damages to others. It breaks down into two main categories:
- Bodily injury liability: Coverage for damages if other people are injured or killed in an accident you cause. It may cover the other party's medical expenses, lost wages, disability, and possibly funeral expenses.
- Property damage liability: Coverage for damage if someone else's property is harmed in an accident you cause, such as their vehicle or building.
Liability insurance is the main type of car insurance that states require drivers to carry, but minimum requirements vary. For example, Pennsylvania requires drivers to have at least $15,000 in bodily injury liability coverage per person, $30,000 in bodily injury liability per accident, and $5,000 in property damage liability coverage per accident.
Check your state requirements to see how much liability insurance coverage you need. There can be steep penalties for driving without insurance, so it's important to meet these minimums.
Collision Insurance
Collision insurance covers damage to your vehicle in an accident caused by you or someone else. These plans will help pay to repair or replace your vehicle, even if you're at fault. Having collision insurance can give you peace of mind that you won't face large vehicle repair bills alone.
Though states do not require collision coverage, if you're leasing or financing the vehicle, you may still need to purchase this coverage as part of your contract.
Comprehensive Insurance
Comprehensive insurance covers damage to your vehicle when you're not driving it. Your policy may cover damage from fire, falling trees, hail, vandalism, and theft, among other adverse events. If these situations occur, your comprehensive insurance will pay to repair or replace your vehicle up to your policy limits. Comprehensive coverage is optional.
If you see full-coverage car insurance options, keep in mind that they include liability, collision, and comprehensive coverage. These plans can be good options for drivers who want mandatory and optional coverage in one neat package.
Personal Injury Protection (PIP)
Personal injury protection, also known as no-fault insurance, covers medical and related expenses for you and your passengers, no matter who causes the accident. In no-fault states like New Jersey, PIP is mandatory.
Uninsured and Underinsured Motorist Coverage
Though liability car insurance is mandatory in almost every state, some drivers still don't have enough coverage. If one of those drivers causes an accident that leaves you with injuries or property damage, what then? That's what uninsured and underinsured motorist coverage is for.
Underinsured and uninsured motorist insurance will pay for damages to you or your passengers if you're in an accident caused by a driver without sufficient car insurance. Only some states require this coverage, including Connecticut, Massachusetts, and North Carolina, so check your local requirements.
Other Types of Car Insurance Coverage
There are some less common types of car insurance you may also want to consider purchasing, including:
- GAP Insurance: Covers the dollar value difference between what your car is worth and how much you still owe on your auto loan balance; may be required by some lenders
- Medical Payments Coverage: Covers medical expenses for injuries to you and your passengers in a car accident, regardless of who is at fault
- Towing and Labor Coverage: Covers the cost of services like towing your vehicle to a repair shop and having work done on it if your car breaks down
- Roadside Assistance: Similar to towing and labor coverage, covers the cost of services you may incur if your car breaks down, like flat tire changes and jumpstarts; may also be called mechanical breakdown insurance
Find the Best Coverage for You at EverQuote
Whether you just want the minimum car insurance required by your state or are looking to add optional coverage, car insurance can be expensive. And who has the time and energy to source quotes from tons of different insurance companies to try to find the best deal? Luckily, you don't have to.
With EverQuote, you can compare personalized insurance options based on your ZIP code and driver profile. That way, it's easy to find the best deal on the coverage you want. Get your free custom comparison today in just a few minutes.