Car insurance is made up of several different types of coverages.

Here we explain how accidents, injuries and damages are covered under each type of car insurance and how these coverages shield drivers from having to pay for repairs and medical bills.

You can also learn about special types of policies, including non-owners and SR-22 certificates.

Key Highlights
  • Car insurance is made up of different types of coverages and these car insurance coverages provide protection for your specific needs.
  • Comprehensive car insurance is optional but you can buy it if you can't afford to repair your car.
  • Collision insurance is also optional, it pays for the damage to your car if you hit another car or object, or get hit by a car or object.
  • If you are injured in a car accident and the driver does not have insurance, uninsured motorist coverage will pay your medical bills.

What is car insurance?

Car insurance is a necessary expense that provides you with financial protection in the event of an accident. It is a great way to protect yourself and others.

Types of car insurance typically cover bodily injury liability, property damage liability, uninsured or underinsured motorist coverage, medical payments, comprehensive physical damage and collision coverage. You can figure out what type of coverage and how much coverage is needed.

Car insurance coverage types

It's not enough to simply be an excellent driver; if you want to drive on public roads, you'll need some type of coverage. There are many types of car insurance that cover different options for drivers and their vehicles. And the cost of each one can vary depending on what it covers, some of them are mentioned below:

Liability Coverage

Liability coverage is a type of insurance coverage that pays for property damage and bodily injuries that others sustain when you are at fault in an accident.

Bodily injury liability covers the following for those you injure in an accident that’s your fault:

  • Medical expenses
  • Funeral expenses
  • Loss of income
  • Pain and suffering
  • Legal defense if a lawsuit results from the auto accident

Property damage liability covers:

  • Damage you cause to another driver’s car
  • Damage to other’s property, such as fences

How it is sold:

Policy limits for bodily injury liability are per person and per accident and coverage is written as such, with property damage amount added to the end.

For example, $50,000/$100,000/$50,000 means that the maximum payout per person injured is $50,000, and the maximum payout for all people injured in one accident is $100,000. The maximum payout for damage to other vehicles and property is $50,000. This coverage may also be simply written as 50/100/50.

What it costs:

Bodily injury liability and property damage liability costs $564, on average, annually for limits of 50/100/50, according to CarInsurance.com's rate analysis.

Coverage recommendations:

If your net worth is:

  • less than $50,000 choose at least 50/100/50
  • between $50,000 and $100,000, choose at least 100/300/100
  • more than $100,000, choose at least 250/500/100

Liability car insurance is required in all states except New Hampshire (where you still must show you’re financially able to pay for an accident you cause – and liability auto insurance is the easiest way to do that). You can get by with bare-bones coverage, your state required minimum liability requirement to drive legally, or buy higher amounts for more protection. It pays out up to the amount of coverage you buy.

Read More : Liability car insurance

Collision Coverage

Collision insurance is an optional car insurance that pays for your damage when you crash into another car or object.

What it covers:

  • Damage to your car if you hit another car or object, or are hit by a car or object
  • Damage to your car if it is flipped or rolled over

What it costs:

Collision coverage costs an average of $526 a year, for a 100/300/100 policy, and $500 deductible on collision.

Coverage recommendations:

  • If your car is less than 10 years old, you should consider buying collision.
  • If your car is more than 10 years old, buy collision if your car is worth $3,000 or more.
  • Buy collision if you can’t afford to replace it if you crash it.

In all states, collision coverage is optional. It is typically fairly affordable, and it’s wise to have it if you have a newer car. If you finance or lease your car, you will be required to buy collision coverage. Collision coverage come with a deductible, the amount you pay before insurance kicks in, and pay out up to the cash value of your car.

Read More : Collision insurance

Comprehensive Coverage

Comprehensive insurance is a car insurance coverage that provides protection against damages to your car from incidents that are not related to collisions.

What it covers:

  • Damage to your car from flooding, hail, wind and fire
  • Vandalism to your car
  • Stolen cars
  • Damage from hitting animals, such as deer, elks or moose
  • Damage from falling objects, such as trees

What it costs:

Comprehensive coverage costs an average of $192, a year.

Coverage recommendations:

  • If your car is less than 10 years old, you should consider buying comprehensive.
  • If your car is more than 10 years old, buy comprehensive if your car is worth $3,000 or more.
  • Buy comprehensive if you can’t afford to repair your car.
  • Buy comprehensive if you live in a region prone to flooding, hail or animal strikes.

Comprehensive insurance is usually optional, but you may be required to buy it if you took out a loan to purchase your car or lease a car. Comprehensive coverage come with a deductible, the amount you pay before insurance kicks in, and pay out up to the cash value of your car.

Read More : Comprehensive insurance

Uninsured/underinsured motorist coverage (UM/UIM)

Uninsured/underinsured motorist coverage is a type of insurance coverage that covers you when you get hit by another driver who does not have enough coverage to pay for any damages or does not have insurance at all.

What it covers:

  • Uninsured/underinsured motorist property damage (UMPD) insurance covers damage to your car if hit by an uninsured driver or a driver with insufficient coverage
  • Uninsured/underinsured bodily injury coverage pays medical bills for you, your passengers and members of your family if injured in an accident caused by an uninsured driver or driver with insufficient coverage
  • Uninsured motorist bodily injury coverage pays your medical expenses if you are injured in an accident caused by a hit-and-run driver

What it costs:

  • Uninsured motorist coverage costs an average of $90 a year.
  • Underinsured motorist coverage costs an average of $58 a year.

Coverage recommendations:

If you have collision insurance, UMPD, which is optional in most states, is not a must-have since collision offers better coverage.

But without UM/UIM bodily injury coverage, you could be stuck either paying for your own injuries or suing a driver with limited financial resources to try to recoup your costs. What happens after an accident with an uninsured/underinsured driver depends on your state insurance laws.

In no-fault states:

  • Your own insurer would pay out for medical expenses under personal injury protection (PIP). But typically personal injury protection limits in no-fault states are quite low, so even a minor accident could leave you with expenses after a claim payment. And, though your health insurance may help pay your leftover medical expenses, it won’t pay for lost wages, or pain and suffering, which is where UM/UIM bodily injury coverage can help.
  • No-fault (PIP) coverage does not cover physical damage to your car, so you need UMPD or collision to make a claim for your vehicle’s damage if you don’t have collision.

In a “tort” state, which means a state where you can sue for damages:

  • To get compensated for an accident caused by an uninsured/underinsured driver, you may have to sue for damages, which is a complicated and costly process. And, it is likely the driver won’t have much money or any assets even if you take him to court.
  • Your MedPay, if you have it, will cover you up to your limits in this instance, but if your limits are too low to cover all your costs, you will be stuck either paying out of pocket or having to litigate.
  • If you have PIP coverage and no collision, it will only cover medical expenses -- not physical damage to your car -- so you need uninsured motorist property damage to make a claim for your vehicle’s damage.

Uninsured motorist coverage and underinsured motorist coverage are required in some states, and in other states it’s optional.

It’s a wise idea to carry this type of coverage as one in eight drivers isn’t insured, according to the Insurance Research Council. It pays out up to the limit you buy, which is usually the same as your liability limits.

Read More : Uninsured motorist coverage

Personal injury protection (PIP)

Personal injury protection is an important insurance coverage. It pays for your medical bills and lost wages if you or someone in the car with you gets hurt in an accident.

What it covers:

for you, your passengers, family members and those you allow to drive your car, regardless of who is at fault for the accident:

  • Medical expenses
  • Lost wages (you are reimbursed a percentage of your income)
  • Funeral expenses
  • Cost for house cleaning, child care and other tasks you may not be able to perform if injured (loss of essential services)
  • Also covers you and your family members if hit by a car while walking

What it costs:

The average annual PIP cost is $198.

Coverage recommendations:

  • If PIP is optional in your state, buying PIP coverage is a good idea if you have little savings to live on should you be injured and lose your income for a period of time.

Personal injury protection (PIP) is required in the 12 no-fault states, optional in 10 states and the District of Columbia, and not available in 28 states, according to the Insurance Information Institute.

Your PIP limits set the maximum amount that will be paid per person for any combination of covered expenses. PIP limits vary by state but are usually in the range of $1,000 to $10,000.

Some states allow you to choose your PIP limits and others set it to a certain amount. You can always choose to buy additional PIP coverage beyond your state required amount.

Read More : Personal injury protection coverage

Medical payments coverage (MedPay)

MedPay or medical payments coverage is an insurance coverage that pays for medical care after a traffic accident. It doesn't matter who is at fault, the insurance company will cover the cost of all your expenses likes surgeries, hospital bills and x-rays.

What it covers:

for you, your passengers, family members and people you let drive your car, regardless of who is at fault in the accident:

  • Reasonable and necessary medical expenses, such as hospital visits and stays, surgery, dental, nursing and X-rays etc.
  • Funeral expenses
  • Injuries if hit by a car or bike while walking (in some states)
  • Injuries while a passenger in another driver’s car

What it costs:

MedPay costs an average of $22 a year.

Coverage recommendations:

  • If you have health insurance that covers car accidents, MedPay isn’t a must-have.
  • Even so, MedPay can work with your health insurance to cover costs for an accident, and is very affordable, so is worthwhile to carry.
  • You may be able to use MedPay to pay your health insurance deductible or co-pays.
  • If you have a high health insurance deductible, MedPay is advisable.

MedPay insurance is required in just one state – Maine, though if you opt to buy car insurance in New Hampshire, you must include MedPay coverage in your policy. In other states, it is an optional coverage.

MedPay pays out, up to your limit, for each individual in the accident. It is usually available for up to $10,000 worth of coverage.

Read More : Medical payments coverage

Gap insurance

Gap insurance is an auto insurance coverage that helps pay for the difference between what you owe and what your car is worth if it was stolen or totaled.

What it covers:

  • Gap insurance, commonly also called loan-lease insurance, pays the difference between the actual cash value of your car and the amount you owe your lender for the vehicle.
  • To make a gap claim, your car must be declared a total loss due to an incident covered under comprehensive and collision coverages.
  • Sometimes gap insurance comes with a limit to the payout, for instance, up to 25 percent of the actual cash value of the car at the time it was totaled.

What it costs:

Gap insurance costs $41 a year

Coverage recommendations:

  • Buy gap insurance from an insurance company, not from your car dealer.
  • Gap insurance sold at dealerships can cost hundreds of dollars more than a policy sold from a car insurance company.

Gap insurance may be required if you finance your car, and is required if you lease your car. Do not buy gap insurance if you own your vehicle outright. To purchase gap insurance, your lender must be a financial institution – not an individual person – and your policy must have comprehensive and collision coverages on it.

Read More : Gap insurance

Full coverage

The term “full coverage” is often misunderstood. Many people mistakenly believe that full-coverage means you are insured for all damages and injuries in any accident. That’s not always the case. Rather, full-coverage is used to describe a car insurance policy that includes comprehensive and collision insurance, in addition to liability insurance.

You should opt for full coverage if you have a newer car, you drive a lot and own a home and have assets to protect. A full-coverage policy with limits of 100/300/100 and a $500 deductible costs an average of $1,355 a year.

Read More : Full coverage car insurance

Roadside assistance coverage

Roadside assistance is an add-on coverage that will come to your rescue when you get stuck on the side of the road. It also includes replacing flat tires, adding gas and if needed transporting people for medical emergencies.

What it covers:

Each carrier handles things differently, but most of them will help with the following:

  • Flat tire replacement
  • Towing a vehicle
  • Recovering keys locked inside your vehicle
  • Providing new battery
  • Delivering gas or oil

How to get it:

There are two ways to get roadside assistance, you can choose an insurance company or a third-party company. When you choose a third-party company, you may also get extra benefits like discounts on what they offer.

What it costs:

Roadside assistance is cheap. If you buy it as an add-on to your insurance, it will cost anywhere from $50-$100+ a year.

Coverage Recommendations:

  • If you want roadside assistance coverage, first decide if you want your car insurance provider to cover it or a third-party.
  • Make sure you know what is covered and how to contact your insurance provider if you need help with something.

Read More: Roadside Assistance coverage

Rental car coverage

Rental car insurance is an optional coverage that you can buy when renting out your vehicle. It protects you and your rented vehicle from any damage you cause while driving.

Types of rental car insurance:

There are four types of rental car insurance:

  • Collision damage waiver
  • Supplemental liability insurance
  • Rental car personal accident insurance
  • Personal effects coverage

What it costs:

If you buy all four types of rental car coverage, it will cost around $20 to $40 a day and it will be added to the cost of your rental car.

Coverage Recommendations:

  • Make sure you buy liability insurance from the rental company before you drive, if you don't have an auto insurance plan of your own.
  • Buying extra rental car insurance may not be the best option for those who already have a policy that covers all of their needs.

Read More : Rental car insurance

What kind of car insurance do i need?

Deciding how much insurance to buy depends on a few factors. Bare-bones coverage may be a good choice if you have few assets or have an old car and don’t drive much. But if you have a home and investments, consider buying more insurance.

If you don’t, you’re at risk for having your money and house taken to cover the cost of an accident. If you financed or leased your car, you will be required to get comprehensive and collision coverage in addition to liability limits of 100/300/100.

Use our How Much Car Insurance Do You Need Tool to get a recommendation.

Alternative car insurance policy types

SR-22

What is an SR-22:

An SR-22 is a form that your car insurance company files on your behalf with the state, typically after you’ve been convicted of a major violation, not a type of insurance.

Your car insurance company uses an SR-22 form to prove to the state that you are carrying the legally mandated coverage you need to drive.

Some violations that typically would require you to have an SR-22 include DUI, reckless driving and driving without insurance. An FR-44 is required in some states, and is basically the same as an SR-22 but is used when the state mandate you carry even higher liability limits.

How do I get an SR-22:

  • To get an SR-22, you must use an auto insurance company that provides SR-22 filing services – not all do.
  • You must then buy a policy with at least the minimum limits that the state requires you to carry.
  • Your insurer will get the form for you, fill it out and file it with the state.
  • Once the SR-22 form is filed by your insurer, you’ll need to maintain the related insurance coverage for the state-mandated period of time, usually three years.

How much does an SR-22 cost:

An SR-22 filing will increase your insurance rate by 89 percent, on average, or by about $1,280 annually, according to CarInsurance.com rate data.

Read More: SR-22 insurance

Non-owner car insurance

What is a non-owner car insurance policy:

You might not own a car, but if you still drive, non-owner car insurance is for you. Non-owner policies are liability car insurance policies and are for:

  • High-risk drivers who are required to buy a liability policy to keep their driver’s license
  • Drivers who don’t own a car and rent frequently (but make certain the non-owner policy covers rentals)
  • Drivers who don’t own a car and want to keep continuous coverage

How do I get a non-owner insurance policy:

You buy a non-owner policy in the same way you buy a standard policy. Typically, non-owner coverage is less expensive than an owner’s policy, usually about $300 a year, though depending on your record, where you live and other factors, it could be more.

Read More : Non-owner car insurance

Mechanical breakdown insurance

Mechanical breakdown insurance is an optional coverage, it helps you when your car breaks down and pays to the mechanic for repairs.

What it covers:

Mechanical breakdown insurance covers major damages suffered by your car and is not covered by the basic auto insurance policy. Whether it's bad brakes or transmission issues, MBI will cover the repairs and get you back on the road quickly.

How to get it:

You can purchase mechanical breakdown insurance from your current insurance provider. Most insurance companies offer it for both new and old vehicles.

What it costs:

If you buy breakdown coverage through your car insurance company it will cost you about $40 to $50 a year.

Read More : Mechanical breakdown insurance

Rideshare insurance

Rideshare insurance is an insurance policy designed to fill coverage gaps between commercial car insurance policy and your personal car insurance policy.

What it costs:

It costs about $15-$300 per year to buy rideshare coverage, in addition to the cost of your personal car insurance.

Coverage Recommendations:

You should consider buying commercial insurance if rideshare insurance isn't available. It will save you from being dropped by your rideshare company.

Read More : Rideshare insurance