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Shopping for car insurance can be confusing with so many types of coverage available. Bodily injury liability, property damage liability, personal injury protection, uninsured motorist coverage, collision coverage — the list goes on.
Car insurance, at a minimum, covers accidents that result in injuries to others, as well as damage you cause to someone else's property. If you purchase additional coverage, it can also cover your own medical bills, damage to your car, incidents out of your control, and so much more.
Here's what's typically covered under each type of insurance.
What does car insurance cover?
When you purchase a car insurance policy, you'll find that you can customize several components of your coverage. You can adjust coverage limits to strike the right balance between what you can afford and what your state requires.
Car insurance is required in most states, with New Hampshire being the only exception, but coverage requirements vary by state. And optional coverage you're not required to have can still be a good investment, depending on how, what, and where you drive.
Here are the most common coverage options for an auto insurance policy and how each protects you.
Bodily injury liability
If you're involved in an at-fault accident that injures another person, bodily injury liability insurance will help pay for the other person's medical expenses and related costs. Bodily injury liability coverage can help pay for the following costs:
- Medical expenses
- Legal fees and counsel if you're sued as a result of the accident
- Loss of income
- Pain and suffering
- Funeral costs
Good to know
When states set minimum coverage requirements for car insurance, these generally apply to liability coverage. For example, California requires all drivers to carry at least $30,000 in bodily injury liability per person ($60,000 per accident) and $15,000 in property damage liability, and Michigan requires all drivers to carry at least $50,000 in bodily injury liability per person ($100,000 per accident) and $10,000 in property damage liability. You can opt to purchase only the minimum liability insurance you need to legally drive, called liability-only insurance, but we recommend looking into other types of coverage until you feel comfortably protected.Property damage liability
If you cause damage to another person's property with your vehicle, property damage liability will help cover the cost of those damages. This can include, but is not limited to, the following repair costs:
- Damage to another vehicle
- Damage to a fence
- Damage to a storefront
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Personal injury protection (PIP)
If you're involved in an accident, personal injury protection will pay you and any other person in your vehicle for injuries, regardless of fault. Coverage may include:
- Medical expenses
- Lost wages
- Rehabilitation expenses
Some states also have PIP coverage requirements. Hawaii, for instance, requires drivers to have $10,000 in PIP coverage.
Collision
If your vehicle is damaged in an accident, collision insurance will cover the cost of repairs minus the amount of your deductible. You're covered no matter who was at fault in the car accident.
Average rate:
Comprehensive
If your vehicle is damaged by something other than a collision, comprehensive insurance will cover the cost of repairs minus the amount of your deductible. Damage from the following is typically covered:
- Theft
- Vandalism
- Fire
- Natural disasters
- Falling objects
- Damage from animals
- A civil disturbance
Uninsured motorist
If you're involved in an accident with an at-fault driver who doesn't have liability insurance, uninsured motorist coverage will cover the cost of your injuries. Uninsured motorist coverage will also cover injuries as a result of an accident caused by a hit-and-run driver. Coverage may include payment for the following:
- Medical expenses
- Lost wages
- Disability
- Pain and suffering
Some states also set requirements for bodily injury coverage for uninsured/underinsured motorists.
Underinsured motorist
If you're involved in an accident with an at-fault driver whose bodily liability insurance isn't enough to cover all your injuries, underinsured motorist coverage pays for those injuries. Coverage may include payment for the following:
- Medical expenses
- Lost wages
- Disability
- Pain and suffering
Uninsured and underinsured motorist coverage are often lumped into one coverage add-on.
Medical payments
If you're involved in an accident, medical payments coverage will help pay your or your passenger's medical bills, regardless of fault. Medical payments coverage may include the following expenses:
- Health insurance deductibles and copays
- Doctor or hospital visit
- Surgery
- Ambulance
- Funeral expenses
Roadside assistance
If your vehicle breaks down, roadside assistance coverage will pay for the labor costs at the disablement site and the costs of towing your vehicle.
Car rental
If your vehicle is disabled due to a covered loss, car rental reimbursement coverage will pay the costs of a rental car up to your coverage limits.
What isn't covered by car insurance?
Car insurance protects you in many different scenarios in which you'd otherwise be liable to pay for repair costs or medical expenses. Your coverages will be thoroughly explained in your policy, and your policy will tell you what types of accidents and damage are covered.
However, several things aren't covered by your car insurance. The following situations are not typically covered:
- Theft of personal items: Although comprehensive coverage protects you if your car is stolen and may cover damage to your car if someone breaks into it, a car insurance policy typically doesn't pay to replace personal property stolen from your car. Personal property is, however, typically protected by renters' and homeowners' insurance.
- Regular repairs: Car insurance won't cover repair costs that result from normal wear and tear or as a result of neglect. So although your car insurance policy will cover damages to your car as a result of a covered accident, you'll have to pay out of pocket for things like worn-out tires or excessive wear on your brakes.
- Using your vehicle for business purposes: A personal car insurance policy will cover you if you're involved in an accident on your way to and from work, but your policy may not cover you if, at the time of the accident, you were using your own car for business purposes without having additional coverage. This additional coverage is known as commercial auto insurance.
- Rideshare driving: This can vary from policy to policy, but regular car insurance may exclude claims for damage caused while driving for fares as a rideshare driver, such as Lyft or Uber. Depending on your policy issuer, rideshare insurance can replace your personal auto policy altogether or be offered as an add-on.
- Other people who drive your car: Although laws vary from state to state, your car insurance policy might cover only the people named in your policy — the insured. This even goes for family members living in your home, so it's important to understand your policy limits and know who is covered before you lend your car to someone else.
- Damage that exceeds your liability limits: When you purchase car insurance, you get to choose your coverage limits for several different components of your policy. Your car insurance provider is not obligated to pay out more than the limits set for each type of coverage, so it's important to purchase the maximum amount of coverage you can afford.
- Driving across the U.S. border: Even though you buy car insurance based on the laws in your state, your policy will cover you anywhere you drive in the U.S. But if you decide to take a road trip to Mexico, most car insurance companies won't cover you once you've crossed the border. Instead, you'll usually need to get a supplemental policy for the duration of your trip. However, many insurers will cover you while you're driving in Canada, but check with your provider.
- Exotic and performance cars: Many U.S. auto insurers have exclusions for exotic and performance cars. You'll typically need to find a specialty insurer for these vehicles. Car insurance providers will inform you if your car isn't eligible for coverage during the quoting process.
How to get the best rates on the coverage you need
If you're looking to save money on car insurance without sacrificing coverage, make sure to compare rates with multiple companies. We suggest at least three, but it never hurts to check your rates with more companies for your desired coverage.
There are countless car insurance companies to choose from, and many offer a way to obtain a free online quote in a matter of minutes. We recommend this option over phone calls and visits to insurance offices because it's generally faster.
You can also use car insurance comparison sites to compare quotes in one location, which saves you both time and money. It's fast, free, and you're not obligated to move forward with a new policy if you don't want to. In short, it cuts down on time and effort because you don't have to fill out multiple forms to see possible rates.
With your quotes in hand, you can purchase your new auto policy or switch your car insurance.
Bottom line
If you're looking to lower your car insurance, you might be tempted to only purchase the state minimum coverages. But before you do, make sure you understand the situations in which you'd be financially responsible and how car insurance works. There are other ways to save money on car insurance besides dropping comprehensive and collision insurance. Understand your needs and budget, and compare quotes from multiple companies before choosing the right car insurance policy.
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