Types of Car Insurance

The five types of car insurance are liability, comprehensive, collision, uninsured/underinsured motorist, and personal injury protection/medical payments. These are the most common types of car insurance, though many insurance companies sell other types of coverage as well, like gap insurance and rental reimbursement.

5 Types of Car Insurance

Liability

Covers other people's expenses after an accident caused by the policyholder.

Comprehensive

Repairs or replaces the policyholder's car if it's damaged by something other than an accident, like vandalism or a natural disaster.

Collision

Pays to repair or replace the policyholder's car after any accident, regardless of fault.

Uninsured/underinsured motorist

Covers the policyholder's repair and medical expenses if they're hit by a driver without insurance or without sufficient liability limits.

Personal injury protection (PIP) and medical payments (MedPay)

Cover the policyholder's medical expenses after an accident, regardless of fault.

Liability insurance is required in nearly every state, and some states also require additional coverage like PIP and uninsured/underinsured motorist insurance. There are no states that require comprehensive or collision insurance, but those types of insurance are usually mandatory for vehicles that are leased or financed.

To learn more, check out WalletHub's guide to the different types of car insurance.

The three types of car insurance that are universally offered are liability, comprehensive, and collision insurance. Drivers can still purchase other types of auto insurance coverage, like personal injury protection and uninsured/underinsured motorist, but they are not available in every state.

3 Major Types of Car Insurance Explained 

1. Liability insurance

Liability car insurance is coverage that pays for other people's expenses after accidents that you cause, and there are two components of it. Property damage liability insurance pays for any damage that you cause to someone's property, and bodily injury liability insurance pays for their medical bills.

Liability coverage is the most common type of car insurance. It is required in almost every state.

2. Comprehensive insurance

Comprehensive car insurance pays to repair or replace your vehicle when it is damaged by something other than an accident, such as vandalism or a natural disaster. It is not required in any state, but it is usually mandatory for vehicles that are leased or financed.  

3. Collision insurance

Collision insurance is a type of car insurance that covers damage to your vehicle that is caused by an accident, regardless of who was at fault. It is not required in any state, but it's usually mandatory for vehicles that are leased or financed.  

Other Types of Car Insurance

 In addition to the 3 major types of car insurance – liability, collision and comprehensive – there are several other types of coverage that are less frequently required but still helpful in the right situation, including:

• Personal Injury Protection (PIP): Pays for several different medical-related expenses after an accident, including loss of income and child care.
• Medical Payments (MedPay) Coverage: Covers medical bills after an accident.
• Uninsured/Underinsured Motorist Insurance: Pays for your vehicle repairs and medical bills if you are involved in an accident with someone who doesn't have enough insurance coverage.

To learn more, check out WalletHub's guide to the different types of car insurance.

The best type of car insurance is a full coverage insurance policy from one of the top auto insurers, like Geico, Progressive, or USAA. With full coverage, any damage to your vehicle will be covered, along with your liability for other people's property damage or medical bills if you cause an accident. Medical expenses for you and your passengers may also be covered if personal injury protection or medical payments coverage is required in your state.

Full coverage includes at least collision insurance, comprehensive insurance, and the state's minimum required insurance. The best car insurance companies offer affordable premiums, multiple discounts, and various insurance coverage options.

Best Car Insurance Companies

• Geico
• Progressive
• USAA
• Esurance
• Travelers

For more information, check out WalletHub's complete picks for the best car insurance companies and our guide on the major types of car insurance.

The two main types of car insurance policies are liability-only and full coverage. While liability-only policies just have bodily injury and property damage liability insurance, full coverage includes comprehensive and collision insurance in addition to state-minimum coverage.

In other words, a liability-only insurance policy will only pay for other people's property damage or injuries after accidents that you cause, while a full coverage policy can cover your own vehicle repairs and medical expenses, depending on the particular types of insurance you include. For example, full coverage won't pay for your medical bills after an accident if you don't purchase PIP or MedPay.

So, even though liability and full coverage are the two main types of car insurance policies, there are still several specific types of car insurance that drivers can purchase.

The Different Types of Car Insurance

• Liability
• Comprehensive
• Collision
• Personal injury protection (PIP)
• Medical payments (MedPay)
• Uninsured/underinsured motorist

In some cases, you may not have the ability to choose between liability-only and full coverage insurance. If your state requires you to have coverage in addition to liability insurance, then a liability-only policy is not an option for you. Additionally, if your car is leased or financed, your lender or lessor may require you to purchase full coverage.  

To learn more, check out WalletHub's guide to the different types of car insurance.

To choose the best car insurance policy, start by determining how much coverage you need and comparing quotes, then choose a company based on affordability, customer reviews, and convenience. You should make sure the policy covers all of your assets and costs as little as possible for the coverage you need.

5 Steps to Choose Car Insurance

1. Determine What Coverage You Are Required to Have

Most states require certain types of auto insurance, such as liability, uninsured motorist, personal injury protection, or MedPay. Plus, if you have a loan or a lease for your car, your lender may require you to have collision and comprehensive insurance.

2. Look Into Optional Types of Coverage

In addition to the required types of insurance, it is recommended that you purchase as much insurance coverage as you can comfortably afford. For example, if you cannot afford to replace your car if it's totaled in an accident, you should strongly consider getting collision insurance. Similarly, if you are concerned about the reliability of your car, emergency roadside assistance and mechanical breakdown insurance are great types of coverage to have.

3. Consider Deductible Options

Remember that some types of insurance coverage, like collision and comprehensive, will include deductibles. While a higher deductible will mean a cheaper monthly rate, it also means you'll be paying a lot more out of pocket if an accident occurs. Only choose a deductible that you know you could afford to pay.

4. Choose Some Potential Companies

Start by looking at the best companies for a specific type of insurance coverage you know you'll need, such as collision insurance or personal injury protection. You can also look at the best or cheapest car insurance companies in your state and narrow your choices from there.

5. Compare Quotes

Once you have a few companies picked out and you know what coverage you're looking for, you can begin to get quotes. We recommend comparing quotes from at least three companies to make sure you're getting the best deal, but the more quotes you get, the better informed you'll be.

The easiest way to get car insurance quotes is online. But if you prefer a more personal approach, you can talk to designated agents from the companies you've picked or find a local broker who can walk you through quotes for several different companies.

Types of Car Insurance You May Need to Choose

Optional Types of Car Insurance You Can Choose 

• Gap insurance to cover the difference between what your car is worth and what you owe on a loan or lease if your car is totaled.
• Rental reimbursement so you can afford a rental car while your car is being repaired.
• Emergency roadside assistance to help you if you get stranded without gas or need a jump start or tow.
• Mechanical breakdown insurance to cover repairs for mechanical parts and systems at a low monthly price.

Factors to Consider When Choosing A Car Insurance Company

• Convenience: How easy is the company to work with?
• Discounts: Do they offer a wide range of discounts to help keep your rates low?
• Customer Reviews: Are customers mostly giving them positive reviews, and do your friends or family members have any experiences with the company?
• Ease of Filing Claims: Do they offer 24/7 claims support?

To learn more, check out WalletHub's guides on the different types of car insurance, how to get car insurance quotes, and the best car insurance companies overall.

The main types of insurance that cover damage to your car are collision and comprehensive insurance. Collision insurance repairs or replaces your car when it's damaged in an accident, while comprehensive insurance applies to damage caused by something other than a wreck, like vandalism or a natural disaster. Uninsured/underinsured motorist coverage can also cover damage to your car, but only in certain situations and states.

 Types of Insurance that Cover Damage to Your Car

• Collision insurance
• Comprehensive insurance
• Uninsured/underinsured motorist insurance (in some states)

When purchased with liability insurance and any other state-mandated coverage, collision and comprehensive insurance make a full coverage policy. There are no state laws that require drivers to purchase collision or comprehensive coverage, but most lenders and lessors require both types of insurance for leased or financed vehicles. Even if you're not required to have collision and comprehensive insurance, they're usually a good investment, since they protect you from paying out of pocket for expensive vehicle repairs.

To learn more, check out WalletHub's guide to the different types of car insurance.

Collision insurance is a type of car insurance coverage that pays to repair or replace your car if you're involved in an accident, regardless of who was at fault. Collision car insurance is never required by state law, but dealerships and banks usually require it for leased or financed cars. It only pays for damage to your own vehicle, and it does not include coverage for medical bills.  

What Collision Insurance Covers

• Collisions with other vehicles
• Collisions with objects like fences or trees
• Single-car accidents that involve rolling or falling over
• Damage caused by hitting an obstruction in the road, such as a pothole

Collision coverage costs an average of $382 per year. The cost of collision insurance varies based on your driving history, you car's value, and your deductible amount. For example, high-risk drivers with a history of claims tend to pay more for collision insurance because they are more likely to be involved in an accident. And if you choose a low deductible for your policy, you will pay more for coverage.

A good rule of thumb is that you should have collision insurance on your car until the cost exceeds 10% of the vehicle's value. However, even then, you should not drop collision insurance if you cannot afford to pay out of pocket to repair or replace your car after an accident that's your fault. To learn more, check out WalletHub's guide to collision insurance.

Comprehensive insurance is coverage that helps pay for the cost of damage to your vehicle when you're involved in an accident not caused by a collision. Comprehensive car insurance covers losses from things like theft, vandalism or extreme weather events.

Comprehensive coverage is never required by state law, but it is usually needed for cars that are leased or financed.

What Comprehensive Insurance Covers

• Theft
• Vandalism
• Damage from falling objects
• Flood damage
• Fire damage
• Damage from animals
• Damage from natural disasters
• Glass damage, such as a cracked windshield

Why You Should Get Comprehensive Insurance

You should consider buying comprehensive coverage if you cannot afford to pay out of pocket to repair or replace your car in a worst-case scenario. Comprehensive insurance is usually considered to be a good investment since it's cheaper than other types of car insurance and covers events that are out of your control as a driver. A good rule of thumb is that if the cost of comprehensive insurance exceeds 10% of your vehicle's value, you can consider dropping it.

To learn more, check out WalletHub's guide to comprehensive insurance.

Full coverage insurance is an insurance policy that protects your vehicle from accident-related and non-accident-related damage, ensuring you are covered regardless of fault. Full coverage insurance often consists of collision insurance, comprehensive insurance, and at least the minimum coverage required by state law.

“Full coverage” is a term that is more commonly used by consumers than actual car insurance companies. Because of this, there are some varying definitions.

Common Definitions for Full Coverage

• Policies that include liability, collision, and comprehensive coverage
• Policies that have the state-minimum insurance plus any coverage required by a lender or lessor
• Policies that provide anything more than the minimum required liability coverage
• Policies that cover anything and everything in the event of an accident

Although the definition of full coverage insurance may be different depending on whom you ask, the definition shouldn't matter too much. You should always decide what car insurance to purchase, and how much, based on your own individual coverage needs as well as your budget.

Full coverage insurance costs can vary wildly depending on your state and what car you drive, since coverage types like collision and comprehensive are based on a car's actual cash value. To learn more, check out WalletHub's guide to full coverage car insurance and compare the cheapest full coverage car insurance companies.

Underinsured motorist coverage is a type of car insurance that applies when the policyholder is in an accident caused by a driver who doesn't have sufficient liability insurance. If the policyholder's expenses exceed the at-fault driver's limits, underinsured motorist covers the remaining bills up to a certain amount.

How Underinsured Motorist Coverage Works

Say that you are involved in an accident that leaves you with $35,000 in vehicle damage. Typically, the at-fault driver's property damage liability insurance would pay to repair your car. But if that driver's liability insurance policy only covers $30,000 in property damage per accident, underinsured motorist coverage would pick up the rest. This would prevent you from having to either file a lawsuit against the driver or pay the remaining $5,000 yourself.

Underinsured motorist coverage is required in some states along with uninsured motorist insurance, which applies when the at-fault driver doesn't have any liability insurance at all. But even if it's not required, underinsured motorist coverage is still optional in most states. To learn more, check out WalletHub's guide to uninsured/underinsured motorist coverage.