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What are the different types of car insurance coverage?

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We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.

Our content is backed by Coverage.com, LLC, a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in states where it is licensed . Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.

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At Bankrate, we strive to help you make smarter financial decisions. To help readers understand how insurance affects their finances, we have licensed insurance professionals on staff who have spent a combined 47 years in the auto, home and life insurance industries. While we adhere to strict editorial integrity , this post may contain references to products from our partners. Here's an explanation of how we make money . Our content is backed by Coverage.com, LLC, a licensed entity (NPN: 19966249). For more information, please see our Insurance Disclosure .

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Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next.

Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. All of our content is authored by highly qualified professionals and edited by subject matter experts, who ensure everything we publish is objective, accurate and trustworthy.

Our insurance team is composed of agents, data analysts, and customers like you. They focus on the points consumers care about most — price, customer service, policy features and savings opportunities — so you can feel confident about which provider is right for you.

All providers discussed on our site are vetted based on the value they provide. And we constantly review our criteria to ensure we’re putting accuracy first.

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Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions.

We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers.

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Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories, except where prohibited by law for our mortgage, home equity and other home lending products. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range, can also impact how and where products appear on this site. While we strive to provide a wide range of offers, Bankrate does not include information about every financial or credit product or service.

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Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in states where it is licensed. Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.

Key takeaways

Car insurance can be broken down into many individual types of coverage, and not every driver needs to buy each type. The most basic auto insurance types are bodily injury and physical damage liability coverage, which transfers your financial responsibility for accidents you cause to your insurance company, and optional collision and comprehensive coverages, which pays for damage to your insured vehicle if you hit another vehicle or stationary object, as well as theft, vandalism and severe weather. Bankrate’s insurance editorial team broke down the various types of car insurance coverage to help drivers make informed decisions when buying a policy.

Common types of car insurance

The most common types of car insurance can be broken down into two broad categories: required coverage and optional coverage.

In nearly every state, required coverage begins with liability insurance, including bodily injury and property damage liability coverage. In addition to liability insurance, some states require drivers to carry first-party medical coverage, such as personal injury protection or medical payments (MedPay) coverage, and/or uninsured/underinsured motorist coverage.

Optional car insurance coverage focuses on the policyholder’s insured vehicle. Collision and comprehensive coverage are both optional, but may be required by lenders for financed or leased vehicles. About 80 percent of U.S. drivers carry collision and comprehensive, according to the Insurance Information Institute (III).

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Powered by Coverage.com (NPN: 19966249)

Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in states where it is licensed. Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.

Rates increased up to 12% this year.

Costs will continue to rise through 2022. Shop for a better rate before you renew your current policy.

Compare auto insurance rates

Powered by Coverage.com (NPN: 19966249)

Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in states where it is licensed. Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.

Required car insurance: liability coverage

The foundation of any car insurance policy is liability insurance, a type of coverage that transfers a portion of your legal and financial responsibility for damage or injuries caused in an accident to your insurance company. Liability coverage is broken into two types: bodily injury and property damage liability. There’s also a form of coverage that will pick up other drivers’ liability if they have insufficient liability coverage, known as uninsured and underinsured motorist coverage.

The liability coverage on your policy, which has no deductible, helps cover the cost of lawsuits, including your legal defense and any damages you are ordered to pay up to your policy limits.

Bodily injury liability (BI)

If you’re found at fault in a car accident that resulted in injuries to other parties, your bodily injury liability coverage can pay for the other party’s medical bills up to your policy’s limits. Bodily injury liability coverage is typically written in split limits, which means your policy covers a separate amount for injuries to a single person and in a single accident. For example, a $25,000/$50,000 bodily injury policy would cover up to $25,000 for a single individual’s medical bills and a total of $50,000 for medical bills across the entire accident.

Coverage example

Property damage liability (PD)

Property damage liability coverage pays to repair the damage you cause to others’ property — not your own — in an at-fault accident. Your insurance company will probably write this as a single limit. For instance, you might see $25,000 under your property damage coverage on your auto policy. This means you have $25,000 worth of coverage to repair something you hit, such as another car, a pole, a house or another stationary object.

Coverage example

Uninsured and underinsured motorist bodily injury coverage (UM/UIM)

Uninsured motorist (UM) coverage and underinsured motorist (UIM) coverage are two different car insurance coverage types, but they are frequently listed together on your auto policy.

Uninsured motorist coverage pays for your medical bills if another driver hits you and they don’t have any bodily injury liability to cover your medical expenses. This coverage may also apply if you are the victim of a hit-and-run. Underinsured motorist coverage, on the other hand, pays for medical bills that exceed the at-fault driver’s bodily injury liability limits. These coverage options may or may not be mandatory, depending on your state.

This also may cover damage to your vehicle depending on how your policy is written and if you don’t have collision coverage.

Coverage example

Uninsured motorist property damage (UMPD)

Uninsured motorist property damage pays to repair the damage to your vehicle if someone hits you and they don’t have insurance. In some states, uninsured property damage is mandatory. In others, it’s not offered or is optional. UMPD can have a maximum payout limit and a mandated or limited deductible option. Also, many states require the driver of the uninsured vehicle to be identified for the coverage to apply, meaning it is often not an option for hit-and-run accidents.

In states where UMPD is not offered, UM will cover damage to your vehicle.

Coverage example

Personal injury protection (PIP)

Personal injury protection (PIP) is first-party insurance that pays for medical bills for you, your family or your passengers regardless of who was at fault in an accident. It can also cover lost wages and necessary expenses, such as child care or household services. Although this coverage isn’t available everywhere, PIP coverage is mandatory if you live in a no-fault state.

Coverage example

Optional car insurance: physical damage coverage

Collision and comprehensive insurance, key components of a full coverage car insurance policy, are the two primary types of physical damage coverage. No state law requires drivers to carry these types of coverage, but lenders typically make them a contract requirement if you’re leasing or financing a vehicle.

Unlike most required coverage, comprehensive and collision insurance come with deductibles. A car insurance deductible is the amount you agree to pay out of pocket in the event of a covered claim, essentially sharing a small part of the financial risk that your insurance policy covers the bulk of. Deductibles help insurers to avoid small claims and save money over time, thus reducing the overall cost of auto insurance.

Collision (COLL)

Collision coverage pays for the damage to your vehicle regardless of who is at fault in an accident. It also covers rollover accidents and pothole damage.

Unlike the liability coverage options, collision doesn’t have a written limit. Instead, it will cover up to your vehicle’s value after depreciation, also called the actual cash value or ACV.

Coverage example

Comprehensive (COMP or OTC)

Comprehensive coverage, sometimes known as “other than collision (OTC)” coverage, pays for the damage to your car resulting from acts of nature (such as hail, wind and floods), fire, theft, vandalism, falling objects and hitting an animal. Comprehensive also covers cracked windshields. Like collision, comprehensive carries a deductible. However, in some states, policyholders have the option to have a separate glass deductible for windshield replacement. Glass deductibles may be lower than the comprehensive deductible and could be as low as $0.

Coverage example

Other types of car insurance coverage

Most car insurance companies will offer the auto insurance types outlined above with standard policies — but your coverage options don’t stop with comprehensive and collision. Depending on your location and your carrier, you may also be able to add additional medical coverage, protection for newly purchased vehicles and various forms of roadside assistance.

Medical payments coverage (MPC or MedPay)

Medical payments coverage, which is not offered in all states, is typically available as an optional coverage that pays toward medical bills for you and your passengers, no matter who is at fault in the accident. Unlike PIP, which is required in no-fault states, MedPay is only required by law in Maine and New Hampshire — and unlike PIP, MedPay won’t cover lost wages or replacement services. This coverage is written on a per-person basis, and the coverage limit usually ranges from $1,000 to $10,000. Additionally, medical payments coverage may apply if a vehicle hits you as a pedestrian.

Coverage example

Gap insurance

Gap insurance is an optional coverage that you may be able to purchase when financing or leasing a new vehicle. As a vehicle ages, it tends to depreciate in value. This depreciation can sometimes cause you to owe more money on your car than it’s worth. In this instance, gap insurance could step in to pay the difference if your new vehicle is totaled in a covered loss or stolen and unrecoverable. This coverage type is typically only available for vehicles less than three years old.

Coverage example

New car replacement coverage

New car replacement coverage is optional, and it pays for a brand new car if your vehicle is totaled and no more than a couple years old or under a certain mileage.

Coverage example

Roadside assistance coverage

Every company’s version of roadside assistance coverage is different, but it typically covers towing, flat tires, battery jump starts and locksmith services. Adding roadside assistance to your car insurance policy may be more affordable than paying for a separate roadside assistance membership.

Coverage example

Rental car coverage

Rental car coverage, sometimes called rental reimbursement, will cover all or part of the cost of a rental car if you need one while your vehicle is repaired due to a covered loss. It’s available up to a set number of days and/or dollar amount.

Coverage example

How to find the best car insurance coverage

Every driver has different insurance needs. Determining the balance between your coverage needs, your insurance budget and other priorities such as customer experience and discount availability is key to finding the best coverage for you.

The bare minimum your policy must include is the liability and other coverage required by your state’s laws. A minimum coverage policy is the cheapest option, but it may not offer enough financial protection for most drivers. With rising car repair costs and an uptick in dangerous driving, you could be responsible for tens of thousands of dollars of financial responsibility following a single accident — and most state’s minimum liability limits only cover up to $50,000 or even less.

Most insurance professionals recommend raising your liability limits above state requirements and adding comprehensive and collision coverage to your policy, unless you own a car that isn’t worth much or can afford to replace your vehicle without insurance. Beyond these basic coverage choices, though, your needs and budget may vary.

If you’re not sure how much car insurance you need, you may want to speak with an insurance professional. Once you’ve found your ideal coverage level, compare rates from multiple companies for those coverage limits to find the best price for your profile.

Frequently asked questions

What is the best car insurance company?

How do I know how much coverage I need?

Can I cancel my insurance coverage at any time?

Can I buy accident forgiveness coverage?

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