What Car Insurance Does - and Doesn’t - Cover

Understanding the different types of car insurance coverage can help you avoid being under-protected. It can also protect you from overpaying. Here’s what you need to know about what car insurance covers.
Last updated Jun 21, 2021 | By Matt Miczulski
Smiling woman driving a car

FinanceBuzz is reader-supported. We may receive compensation from the products and services mentioned in this story, but the opinions are the author's own. Compensation may impact where offers appear. We have not included all available products or offers. Learn more about how we make money and our editorial policies.

Shopping for the best car insurance can be confusing because there are several different types of coverage available. Take one look at an auto policy and you’ll know exactly what I mean. Personal injury protection, bodily injury liability, uninsured motorist coverage, the list goes on. If you’re trying to determine which coverage to get, this information can be overwhelming.

Although it may feel like there’s a lot going on, the entire process of purchasing a new policy will be much easier once you have an understanding of what car insurance covers.

Here’s what’s typically covered under each type of insurance.

In this article

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 find the right balance between what you can afford and what’s required by your state. In some instances, certain coverages may not be needed at all. For example, you may decide to exclude towing coverage because you’re currently a AAA member. Because your AAA membership includes roadside assistance, there’s no need to pay for the same coverage twice.

Car insurance is required in a majority of states, but coverage requirements may vary by state. Even if car insurance isn’t required in your state, it’s still a good investment.

Here are the most common coverages you’ll find on an auto insurance policy and how each protects you.

Collision

If your vehicle is damaged in an accident, collision coverage will cover the cost of repairs, minus the amount of your deductible. You’re covered no matter who was at fault in the accident.

Comprehensive

If your vehicle is damaged by something other than a collision, comprehensive coverage 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

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

Bodily injury liability

If you’re involved in an at-fault accident that injures another person, bodily injury liability coverage 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

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

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

Medical payments

If you’re involved in an accident, medical payments coverage will help pay your or your passenger’s medical expenses, 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 costs of labor at the site of disablement and the costs of towing your vehicle.

Car rental

If your vehicle is disabled due to a covered loss, car rental coverage will pay the costs of a car rental 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’re not covered 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 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. Depending on your policy issuer, rideshare insurance can replace your personal auto policy altogether, or it can 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 relatives living in your home, which is why it’s important to read your policy carefully to understand who is covered before you lend your car to someone else.
  • Damage that exceeds your limits of liability: When you purchase car insurance, you get to choose your coverage limits for several different components of your policy. Your car insurance provider is under no obligation 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.

How to find the right coverage

Whether you’re looking to save money on car insurance or purchase a new commercial truck insurance policy for your business, having the right coverage is essential. Before you shop for a new policy, determine which coverages you need and how much you can afford. Once you’ve done this, you can begin to map out how to get car insurance coverage.

There are numerous car insurance companies to choose from, which means you have a variety of options. Many providers offer a way to obtain a free online quote. Alternatively, you can call and speak with a representative directly.

If you’re shopping around for the best rates, it can be overwhelming to have to compare so many different quotes. You have to fill out the same information over and over again, which is redundant and time-consuming. Fortunately, this isn’t always the case.

Insurance marketplaces allow you to compare insurance providers in one location, which saves you both time and money. Provide Insurance is an online insurance marketplace that takes your information and the details of the policy you’re looking for and returns the most relevant options. 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 having to fill out multiple insurance quotes and allows you to compare quotes in one place.

With your quotes in hand, it’s time to purchase your new auto policy. Connect with a licensed agent and hash out the exact details of your policy. When your new policy is issued, make sure to review it thoroughly to ensure your information and coverages are accurate.

The last word on what car insurance covers

Car insurance is made up of several components. Some protect you and your passengers; others are in place to compensate other drivers if you’re found to be at fault in an accident. Familiarizing yourself with the different coverages will help to make sure you’re always fully protected without overpaying on your policy.

  • Save up to $500 a year on your car insurance
  • Compare dozens of providers in under 5 minutes
  • Fast, free and easy way to shop for insurance
  • Quickly find the perfect rate for you

Author Details

Matt Miczulski Matt Miczulski is a personal finance writer specializing in financial news, budget travel, banking, and debt. His interest in personal finance took off after eliminating $30,000 in debt in just over a year, and his goal is to help others learn how to get ahead with better money management strategies. A lover of history, Matt hopes to use his passion for storytelling to shine a new light on how people think about money. His work has also been featured on MoneyDoneRight and Recruiter.com.