Here are the main types of auto insurance coverage, each offering different levels of protection:
- Liability Coverage
What It Covers: Pays for bodily injury and property damage you cause to others in an accident where you’re at fault.
Requirements: Mandatory in most states, with minimum coverage limits that vary.
Limits: Typically divided into bodily injury per person, bodily injury per accident, and property damage.
- Collision Coverage
What It Covers: Pays for damage to your vehicle from a collision with another vehicle or object, regardless of fault.
Requirements: Optional, but often required by lenders if you finance or lease your car.
- Comprehensive Coverage
What It Covers: Covers damage to your vehicle from non-collision-related incidents, such as theft, vandalism, fire, natural disasters, or hitting an animal.
Requirements: Optional, though it’s often required by lenders for financed or leased cars.
- Uninsured/Underinsured Motorist Coverage (UM/UIM)
What It Covers: Protects you if you’re in an accident with a driver who doesn’t have insurance or has insufficient coverage. Covers medical expenses, lost wages, and, in some cases, property damage.
Requirements: Required in some states; optional in others.
- Personal Injury Protection (PIP)
What It Covers: Also known as “no-fault insurance,” PIP covers medical expenses and sometimes lost wages and other costs, regardless of fault. Available only in certain states.
Requirements: Required in no-fault states, optional elsewhere.
- Medical Payments Coverage (MedPay)
What It Covers: Pays for medical expenses for you and your passengers, regardless of fault. Similar to PIP but without coverage for lost wages or additional expenses.
Requirements: Optional; available in most states.
- Gap Insurance
What It Covers: Pays the difference between the car’s actual cash value and the amount you still owe on a loan or lease if the car is totaled.
Requirements: Optional, often recommended for new cars or leased vehicles.
- Rental Reimbursement Coverage
What It Covers: Helps cover the cost of a rental car while your vehicle is being repaired due to a covered loss.
Requirements: Optional; add-on to comprehensive or collision coverage.
- Roadside Assistance
What It Covers: Provides services such as towing, jump-starts, and lock-out assistance if your car breaks down.
Requirements: Optional; usually added as a rider or provided through third-party services.
- New Car Replacement Coverage
What It Covers: Replaces a totaled new car with a brand-new one of the same make and model, rather than paying the depreciated value.
Requirements: Optional; typically available only for newer vehicles.
Each type of coverage is designed to protect you from different risks, so understanding these options can help you tailor an insurance policy that fits your needs and budget.