The 6 most common types of car insurance are liability, collision, comprehensive, personal injury protection, medical payments (MedPay), and uninsured/underinsured motorist coverage. Almost every state requires drivers to carry certain types of car insurance coverage, but insurers offer optional coverage as well. Your unique situation will determine which types of auto insurance coverage you need.
Key Takeaways About the Different Types of Car Insurance
- Most states require drivers to carry a certain amount of liability car insurance.
- Personal injury protection, MedPay, and uninsured/underinsured motorist coverage are only required in some states.
- Collision and comprehensive coverage are not required by state law but may be required by lenders.
- Not all insurance companies offer every type of auto insurance coverage.
- When deciding which types of car insurance coverage to buy, consider what car you drive, whether its financed, and what other types of insurance you have.
Most Common Types of Car Insurance
1. Liability Car Insurance
If you cause an accident, this two-part coverage — including bodily injury liability and property damage liability — will pay for the other party’s medical bills and vehicle repairs. It will not protect you or your passengers if you are injured or your vehicle is damaged as a result of the wreck. Learn more about liability insurance.
2. Collision Car Insurance
This type of coverage will pay to fix or replace your own vehicle after an accident. Coverage extends to damage caused by collision with an object (e.g., a tree or house) or an accident in which no object was involved (e.g., if your car flips).
Most states don’t mandate collision coverage, but if you have a loan or a lease, your finance company will probably require it. Collision insurance usually cannot be purchased without comprehensive coverage. Learn more about collision coverage.
3. Comprehensive Car Insurance
This protects your vehicle against certain types of damage not caused by an accident, such as theft, a falling object or a natural disaster. Comprehensive insurance is optional unless your lender or lessor requires you to have it. This type of insurance is usually purchased in combination with collision coverage. Learn more about comprehensive coverage.
4. Personal Injury Protection (PIP)
Often referred to as “no-fault insurance,” personal injury protection covers medical expenses you incur in an accident regardless of fault. Coverage extends to other drivers listed on your policy, members of your household and your passengers. Qualifying expenses can include medical bills as well as those not typically covered by health insurance such as lost income, child care or even a funeral.
Only 15 states require PIP. It is optional in many other states but isn’t available everywhere. Learn more about personal injury protection.
5. Medical Payments (MedPay) Coverage
This coverage type is similar to PIP but is more limited in scope. It covers accident-related medical expenses for you, your passengers, your household members and other policyholders.
As optional coverage, it supplements health insurance for those who have it and serves as a useful substitute for those who don’t. It can also cover the copays and deductibles of other insurance policies, including health insurance and PIP. Learn more about auto medical payments insurance.
6. Uninsured/Underinsured Motorist Coverage
Some drivers will break the law and drive without auto insurance. Others won’t have adequate coverage. In the event you are injured or your car is damaged in an accident caused by this sort of driver, this coverage can pay for medical bills and car repairs. It is required in about half the states. Learn more about uninsured/underinsured motorist coverage.
State laws vary, and not all of the above coverage options are offered in all states. But the typical auto insurance policy is likely to include most of these types of coverage.
Other Types of Car Insurance Coverage
Guaranteed Auto Protection (Gap)
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. Learn more about gap insurance.
Personal Umbrella Policy (PUP)
PUP 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.
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 monthly premium instead of paying a lump sum up front.
Pay-As-You-Go or Usage-Based Insurance
This is not a different type of insurance coverage; it’s just a new way to pay for insurance like liability, collision and comprehensive coverage. By permitting the insurer to track your mileage and driving habits, you become eligible for discounts.
Non-Owner Car Insurance
This is a type of liability insurance for people who do not own their own car. People without a car may need to purchase this insurance to get a suspended driver’s license reinstated.
An SR-22 is a certification that insurance companies send to the state to confirm that high-risk drivers are carrying the minimum required insurance. Learn more about SR-22 insurance.
How to Choose Auto Coverage
With so many types of insurance available, what combination of car insurance should you get? That depends on your own situation: What kind of car you drive, whether it’s financed, what other insurance you have, among many other considerations.
To help guide your decision, WalletHub has ranked the importance of the various forms of auto insurance, with tips that will help you choose the right types and levels of insurance.
Types of Car Insurance Ranked By Importance
Who Should Get It: Anyone who has a car must carry at least the minimum required in his or her state.
Other Considerations: If you can afford it, getting more than the minimum coverage buys you peace of mind and protects your assets.
Who Should Get It: Even if you’re not worried about your own medical costs, remember that this covers your family and other passengers, too.
Other Considerations: If you don't have health insurance, it's even more important to consider PIP or MedPay.
3. Collision & Comprehensive
Who Should Get It: Drivers with a car loan or a lease will be required to carry these kinds of coverage. You also need this protection if you couldn’t afford to cover the cost of a total loss of your car.
Other Considerations: You can lower your premiums by choosing a higher deductible, but only if you would be able to come up with the deductible after an accident. This coverage also might not make sense if your car is no longer worth very much.
Who Should Get It: People who have more than the minimum level of liability coverage should consider matching levels of uninsured/underinsured motorist coverage.
Other Considerations: Check with your insurer to see what coverage you would get from collision, PIP or MedPay coverage you already have.
Who Should Get It: Gap insurance is for anyone who is “upside down” on auto financing, which includes most people who recently purchased a car.
Other Considerations: Keep an eye on what your car is worth. When it's more than what you owe, you should cancel your gap policy.
Who Should Get It: High net-worth individuals who need more protection than is available from auto & homeowner's insurance can get it from a personal umbrella policy.
Other Considerations: An umbrella policy will cover other liabilities, like slander and false arrest
Who Should Get It: These kinds of coverage are for people who don’t want to bear any out-of-pocket costs, even minor ones.
Other Considerations: These policies are affordable, but they also don't cover very much. Are you sure you couldn't handle these expenses on your own?