The Five Most Common Types of Car Insurance And How to Know What’s Right for You

The five most common types of car insurance are auto liability coverage, uninsured and underinsured motorist coverage, comprehensive coverage, collision coverage, medical payments, and personal injury protection. Some of these coverages may be mandatory while some are only optional. Even if a type of coverage is not required, it may still be available to purchase from your insurer.

The Five Types of Car Insurance

Liability Car Insurance

What It Covers: Other people’s medical bills and vehicle repairs after accidents that you cause. It does not cover any expenses for you or your passengers.

Who Should Get It: Drivers in almost every state are required to have liability insurance in order to drive legally.

Collision Car Insurance

What It Covers: Damage to your own vehicle if you’re involved in an accident with another car, you hit a stationary object, or you get into a single-car accident.

Who Should Get It: Drivers with a car loan or a lease will be required to carry collision insurance. You should also get it if you can’t afford to repair or replace your car if it’s unexpectedly damaged.

Comprehensive Car Insurance

What It Covers: Damage to your own vehicle that’s caused by something other than an accident, like vandalism or a natural disaster.

Who Should Get It: Drivers with a car loan or a lease will be required to carry comprehensive insurance. You should also get it if you can’t afford to repair or replace your car if it’s unexpectedly damaged.

Personal Injury Protection (PIP)

What It Covers: Medical expenses for you and your passengers after an accident. Qualifying expenses can include traditional medical bills as well as costs not typically covered by health insurance such as lost income, child care, or even a funeral.

Who Should Get It: Drivers in any of the 12 states where PIP is required. Even if it’s not required, you should purchase PIP if it’s available in your state and you can afford it, since it can protect you against hefty medical bills.

Uninsured/Underinsured Motorist Coverage

What It Covers: Medical bills and vehicle repairs if you’re in an accident caused by an uninsured motorist or a driver who doesn’t have enough liability insurance to cover your expenses.

Who Should Get It: Drivers in the 20 states that require uninsured motorist coverage. You should also consider purchasing it if you don’t have overlapping types of coverage, like collision insurance or PIP.

Other Types of Car Insurance Coverage

Gap Insurance: Your vehicle depreciates over time, including the moment you drive it off the lot. In a catastrophic loss, your auto insurer will only pay your car’s actual cash value, which could be less than what you owe on a loan or lease. Gap insurance will pay for the dollar-amount “gap” between the balance of your financing and what your car is worth.

Umbrella Insurance: Umbrella insurance isn’t car insurance in the strictest sense. It’s an extra level of broad-based liability protection beyond homeowner and auto policies, and it protects assets of $1 million or more in case of a lawsuit.

Rental Reimbursement: While your car is being repaired under a claim, rental reimbursement will keep you on the road by covering the cost of a rental car. There are limits on how much the insurer will pay per day and per claim, but it’s usually enough to cover a rental for the full amount of time your car is in the shop.

Emergency Roadside Assistance: This coverage option will provide assistance if you lock yourself out of your car, need a tow or jump start, get a flat tire or run out of gas. If your car is inoperable, you can get a tow to a nearby garage of your choice, up to a specified distance.

Mechanical Breakdown Insurance: Mechanical breakdown insurance can cover the costs of repairs to mechanical parts and systems. This coverage is similar to extended warranties and service contracts, but unlike those products, you pay a

Determining which type of coverage you should have for your automobile often raises questions. We will be happy to talk you through the process and help you find a policy that’s right for you.