There are six basic types of car insurance that make up a standard policy, as well as some additional coverage options that many drivers choose to add. You’re not required to have every type of auto insurance, but that doesn’t mean they’re not still useful.
Most common types of auto insurance
There are six basic types of auto insurance that make up a standard policy. They’re the most common types of car insurance coverage because they’re the ones that are most often required, either by law or by your lender or lessor.
The most common types of car insurance are:
1. Liability coverage
Liability coverage is the most important part of your car insurance policy, and it’s required in almost every state. There are two types of liability insurance and they each cover slightly different things:
Bodily injury liability coverage (BIL): Covers injuries to other drivers after an accident you’re responsible for, along with related expenses like lost wages.
Property damage liability coverage (PDL): Covers damage that you cause in a car accident, usually to other cars but also to things like buildings or fences.
When you’re in an accident and you’re found to be at fault for the crash, your car insurance will cover the cost of the other driver’s injuries and damaged property up to your policy’s limits.
If you choose lower liability limits, like 15/30/5 or 25/50/25, and you cause more damage than your policy covers, you will be held responsible for any costs beyond your policy’s limits. That's why it's a good idea to set high amounts of liability insurance.
Remember that both kinds of liability insurance cover other people, not you or your car. The driver whose car you hit can file a liability claim with your car insurance.
Who needs liability insurance?
Everyone needs liability coverage, and most drivers should get higher amounts of bodily injury and property damage liability coverage thanwhat their state requires. Without enough liability insurance, you could be stuck paying tens of thousands out of pocket after a crash.
2. Collision coverage
Collision coverage pays for damage to your own car after an accident, even if you were at fault. Along with comprehensive coverage, it’s part of what makes up what’s called a full-coverage policy.
Collision coverage requires a deductible, which is the amount of money you’ll pay out of pocket if you have to make a claim. Usually, collision deductibles are set at $500, $1,000, or more.
Who needs collision coverage?
Collision coverage isn’t required by any state, but you’ll usually have to get it if you lease your car or financed it with a loan. Even though it’s optional, you should consider getting collision coverage. Otherwise, you’d be stuck paying for repairing or replacing your car yourself after an at-fault accident.
3. Comprehensive coverage
Comprehensive coverage (along with collision coverage) is the other part of auto insurance that makes up a full-coverage policy. Comprehensive coverage covers damage that’s not caused by a collision, including damage from:
Falling tree branches and debris
Windstorms, including tornadoes and hurricanes
Rain,flooding, and other water damage
Hitting an animal, like a deer
Who needs comprehensive insurance?
Like collision insurance, comprehensive insurance is usually required by your car's lienholder or lessor (and also requires a deductible). It’s an especially useful type of coverage if you keep your car in an uncovered driveway or on the street, where it may be damaged or stolen.
4. Uninsured and underinsured motorist coverage
Uninsured and underinsured motorist coverage (sometimes calledUM/UIM coverage) are two different types of coverage that are often lumped together. They cover damage to your car caused by a driver who either doesn’t have car insurance or doesn’t have enough car insurance to cover their share.
Uninsured motorist coverage: Covers damage from an accident caused by a driver who doesn’t have any car insurance.
Underinsured motorist coverage: Covers damage from an accident caused by a driver with some car insurance, but not enough to fully pay for the damage they caused.
Who needs uninsured and underinsured motorist coverage?
At least some amount of uninsured or underinsured motorist coverage is required in 23 states. But it’s a good idea to consider getting UM/UIM even if your state doesn’t require it. Both UM and UIM coverage are relatively cheap, and having them can help you avoid paying for damage you didn’t cause, like a hit-and-run.
5. Personal injury protection
Personal injury protection, or PIP, is a type of car insurance coverage that covers your injuries, lost wages, pain and suffering, and even funeral expenses after a car accident, regardless of fault.
PIP, also called no-fault insurance, is required in no-fault states, where drivers have to get coverage for their injuries after a crash from their own car insurance, even if another driver was at fault.
Who needs personal injury protection?
There are 12 no-fault insurance states where PIP is required. If you have sufficient health insurance, you can use it after an accident and may not need more PIP than the amount required by your state.
The no-fault states that require PIP are:
6. Medical payments coverage
Medical payments coverage is another car insurance coverage that pays for your injuries after an accident, but unlike PIP, it’s almost always optional and it’s typically capped at a much lower limit. Unlike a health insurance policy, there are no deductibles for medical payments coverage.
In addition to your injuries, medical payments insurance can cover:
Trips to the doctor’s office
Medical care from nurses
Surgery, X-rays, and other procedures
Ambulance and EMT charges
Deductibles and copays for health insurance
Who needs medical payments coverage?
MedPay is only required in a couple of states. But it’s smart to add medical payments coverage if you don’t have health insurance or you’re worried your health insurance won’t cover your injuries after an accident.
Less common types of auto insurance
There are a few less-common types of auto insurance that aren’t required in any state. But these types of coverage are offered by most big car insurance companies, and you may want to consider adding them to your policy.
Less common types of car insurance include:
7. Rental car reimbursement coverage
Rental car reimbursement pays for the cost of a rental car (up to a limit) after an accident lands your regular vehicle in the repair shop.
Rental car reimbursement has both a daily and total limit, so it may cover something like $75 per day, up to $1,000 total. When you get car insurance, you’ll be able to adjust the limits of your rental car reimbursement coverage (just like with other types of insurance).
Who needs rental car reimbursement insurance?
Rental reimbursement coverage is always optional, but it’s one of the more affordable car insurance add-ons. Adding rental reimbursement coverage to your policy means you can avoid paying for a rental car yourself after a covered accident.
8. Roadside assistance coverage
Roadside assistance coverage, sometimes called towing and labor coverage or sold as part of a trip interruption package, covers the cost of emergency services, like:
Transportation away from a stranded car
Roadside assistance coverage is usually cheap — it may cost around $15 per vehicle, depending on the company. Sometimes it works by connecting you directly to a covered roadside service company, and sometimes you’ll submit the cost of the services for reimbursement after the fact.
Remember that roadside assistance covers the cost of the actual labor, but it won’t cover any new parts or mechanical fixes.
Who needs roadside assistance insurance?
Roadside assistance coverage is a useful (and affordable) add-on, but it’s possible that you’re already covered for emergency roadside services by another company, such as AAA, or through your credit card. If you are, there’s no need to add roadside assistance coverage through your car insurance company.
9. Gap insurance coverage
If your car is totaled, your car insurance will reimburse you for its actual cash value, which is its value after depreciation, but that’s not always enough to pay for the remainder of your loan or lease.
Gap insurance can pay for the difference between what your car is worth (after depreciation) and what you still owe on the lease or loan, so you don’t have to pay it off yourself after an accident.
Who needs gap insurance?
Like with comprehensive and collision coverage, your lessor or lienholder may require you to have gap insurance. If you lease or finance a car and you’re not required to get gap insurance, you should still consider adding it anyway, so you’re not stuck making payments on a totaled car.
10. New car replacement coverage
The settlement you get after your car is totaled may not be enough to pay for a replacement that’s the same make and model, especially if you had an expensive new car.
That’s where new car replacement comes in. With this coverage, you’re guaranteed to be paid enough for your totaled car to go out and buy a new one of the same kind. Some companies even offer better car replacement coverage, which pays for a car one model year newer than your old one.
Who needs new car replacement insurance?
New car replacement coverage is an optional type of car insurance coverage, but not everyone can add it to their policies. Only some companies offer this coverage — and those that do usually require that your car is only two to three years old or newer and you’re its first owner. It can also be expensive, so it’s best for drivers who are willing to pay a little more for peace of mind.
Other types of car insurance policies
In addition to the different types of car insurance coverage that make up a typical policy, there are also some non-standard types of car insurance policies that you may want (or need) to consider.
These types of car insurance policies may come with lower (or even higher) rates, or may be best suited to certain cars and drivers. They are:
Non-owner car insurance: This type of insurance policy acts as extra liability insurance for drivers who don’t own their own cars, but who rent or borrow cars frequently and might need temporary coverage.
Per-mile and usage-based car insurance: These types of policies set rates based on how well or how often you drive. You’d still get standard coverage, but you’d pay less for driving fewer miles or driving safely.
Car insurance with an SR-22: If you have to file an SR-22 with your insurance company after a license suspension, you’ll have to get a high-risk policy. High-risk insurance policies are normal policies, except they cost more than average since the insured driver doesn’t have a clean record.
Classic or antique car insurance: This type of car insurance covers collectible cars that aren’t used for daily driving. It may come with collector-specific perks, like spare parts coverage, and it's usually for an agreed-value rather than the ACV of the car. It tends to be cheaper than a regular policy, too.
Speciality or performance car insurance: If you own an exotic or luxury vehicle, you’ll probably have a special policy that includes extra protection. Luxury car insurance comes with gap protection and inflation guard, and may need to be purchased through a specialty carrier.
Is full-coverage a type of car insurance?
Despite its name, full-coverage car insurance isn’t actually a separate form of car insurance. Instead, a “full coverage” policy is just one that includes comprehensive and collision coverage in addition to what’s required by your state, like liability coverage.
This means that companies don’t usually offer full coverage by name, but it’s easy to get full coverage once you know what you’re looking for.
What types of auto insurance does the law require?
State laws usually require liability insurance. Some states (but not all) require uninsured or underinsured motorist coverage, and personal injury protection (PIP) is required by law in no-fault states. Medical payments coverage (MedPay) is only required by law in Maine and Pennsylvania.
The only states that don’t require any car insurance are New Hampshire and Virginia. In Virginia, though, drivers have to pay an uninsured drivers fee of $500 if they want to go without insurance.
Regardless of the amount of insurance that your state laws require, you should get more coverage than the legal minimums. State minimums usually offer very little protection, and you could be left on the hook for thousands of dollars in bills for injuries and property damage after an accident.
How to choose the types of car insurance you need
While you should get more insurance than what’s required in your state, not all drivers need to have every type of auto insurance.
Instead of only buying the lowest possible amounts of insurance or adding every single endorsement that you can, you should use your state’s minimum requirements as a starting point, and then get as much liability insurance as you can reasonably afford.
We recommend comprehensive and collision coverage too, but only if they make sense for you (if your car isn’t worth much or you aren’t worried about paying for repairs out of pocket, you can probably skip full coverage).
To avoid higher premiums while still getting complete coverage, compare rates from top insurance companies and check average costs in your area to make sure you’re not paying too much.