In this guide, we’ll break down the main auto insurance coverage options so you can make an informed choice when comparing providers. Whether you’re buying a new policy or reviewing your current one, knowing how each coverage works ensures you’re neither underinsured nor overpaying for protection you don’t need.
- PIP and MedPay cover medical expenses, with PIP offering more comprehensive protection.
- Choose coverage based on your car, finances, driving habits, environment, and state requirements.
What Are the Different Types of Car Insurance Coverage?
The various types of car insurance coverage protect you in different ways, from covering repair costs after an accident to handling medical bills when injuries occur. Each type serves a unique purpose like safeguarding your vehicle, protecting against injuries, or providing essential services when unexpected incidents happen.
Here are the main types of car insurance coverage available:
- Liability insurance: Covers damages you cause to others in an accident
- Collision insurance: Pays for repairs to your car after an accident
- Comprehensive insurance: Protects against theft, weather damage, and other non-collision incidents
- Uninsured/underinsured motorist coverage: Safeguards you if you're hit by a driver with insufficient insurance
- Personal injury protection/medical payments coverage: Covers medical expenses for you and your passengers
- Gap insurance: Bridges the difference between your car's value and loan balance if your car is totaled
- Roadside assistance coverage: Provides help with breakdowns and other roadside emergencies
- Rental reimbursement coverage: Helps cover temporary transportation costs while your car is being repaired
Liability Coverage
What It Covers
Liability coverage protects you when you’re at fault in an accident. It helps cover the costs of damage to another person’s car or property and medical expenses for injuries you cause — but it doesn’t pay for damage to your car. Nearly every state requires this coverage by law, except for New Hampshire and Virginia.
Liability coverage has two parts:
Bodily Injury Liability: Covers medical expenses, rehabilitation, and legal fees for others injured in an accident you caused.
Property Damage Liability: Pays for damage to another person’s property, including their vehicle, fence, or building.
Example: If you rear-end another driver at a stoplight, your liability coverage would pay for their medical bills and car repairs — but not your own.
When You Need It (and When You Might Not)
Liability coverage is mandatory in most states and forms the foundation of all car insurance policies.
Increase your limits if you:
Drive frequently or in high-traffic areas
Have significant assets to protect
Want peace of mind in case of a major accident
Even if your state doesn’t require it, it’s wise to carry liability coverage — the financial risk of going without it is too great.
Collision Coverage
What It Covers
Collision coverage helps cover the costs of repairs to your car after an accident, regardless of who’s at fault.
This includes collisions with:
Other vehicles
Fixed objects like fences, poles, or guardrails
Road barriers, curbs, or medians
It doesn’t cover theft, weather, or animal damage — that’s handled by comprehensive coverage.
Example: If you back into a lamppost or another driver sideswipes your car, collision coverage would pay for repairs after your deductible.
When You Need It (and When You Might Not)
Collision coverage is optional but often required for leased or financed cars. It’s worth keeping if:
Your car is new or still being paid off
You couldn’t easily afford repairs out of pocket
You may drop it once your vehicle’s value has depreciated to a few thousand dollars.
Comprehensive Coverage
What It Covers
Comprehensive coverage protects your vehicle from non-collision incidents that happen outside of accidents. This type of auto insurance coverage helps cover the costs of repairing or replacing your car after these events.
- Theft or vandalism
Fire or explosions
Weather events (hail, floods, hurricanes)
Falling objects or debris
Animal collisions
Broken or cracked windshields
Example: If your car is stolen or damaged by hail, comprehensive coverage pays for repairs or replacement after your deductible.
When You Need It (and When You Might Not)
Keep this coverage if you:
Own a newer or valuable vehicle
Live in an area with high theft or extreme weather
Lease or finance your car
You might skip it for older cars where premiums exceed potential claim value.
Uninsured and Underinsured Motorist Coverage
What It Covers
Uninsured/underinsured motorist (UM/UIM) coverage protects you if another driver either has no insurance or insufficient coverage to pay for damages.
It covers:
Vehicle repairs
Medical expenses for you and your passengers
Damages from hit-and-run accidents
Example: If you’re hit by an uninsured driver, your UM coverage helps cover the costs of your medical bills and vehicle repairs. If the at-fault driver has insurance but not enough to pay for your losses, UIM coverage bridges the gap.
When You Need It (and When You Might Not)
This coverage is required in over 20 states, including Connecticut, Illinois, Massachusetts, New York, and Oregon.
You should keep it if:
You live in an area with many uninsured drivers
You rely on your car daily
Your health insurance doesn’t fully cover accident-related injuries
It’s affordable and offers valuable protection even when optional.
Personal Injury Protection (PIP) and Medical Payments Coverage
What It Covers
Both Personal Injury Protection (PIP) and Medical Payments Coverage (MedPay) cover medical expenses after an accident, regardless of fault.
The difference:
PIP (No-Fault Insurance): Pays for medical bills, lost wages, rehabilitation, and even household or funeral costs.
MedPay: Covers only medical and funeral expenses.
Example: If you’re injured in an accident and can’t work for a few weeks, PIP coverage helps cover the costs of both medical bills and lost income. MedPay would handle just the medical side.
When You Need It (and When You Might Not)
PIP coverage is required in 13 states — including Florida, Michigan, New Jersey, and New York — and is valuable if:
You depend on your income and can’t afford downtime
You lack robust health insurance
You live in a no-fault state
MedPay is optional but useful for supplemental medical coverage. You may skip these if your health and disability insurance are strong.
Gap Coverage
What It Covers
Gap insurance (Guaranteed Asset Protection) covers the difference between your car’s actual cash value and what you still owe on a loan or lease if your car is totaled or stolen.
Example: If you owe $25,000 on your loan but your car is valued at $20,000 after an accident, gap coverage helps cover the costs of the remaining $5,000.
When You Need It (and When You Might Not)
Gap insurance is a smart choice if you:
Financed or leased your car
Made a small down payment
Have a long loan term
Drive a new car that depreciates quickly
You can skip it if you own your car outright or owe less than it’s worth.
Other Optional Car Insurance Coverage Types
Beyond the main types of car insurance coverage, several optional add-ons can enhance your protection and convenience. These coverages aren’t required by law, but they can make a big difference depending on your driving habits, vehicle, and lifestyle.
Here are some of the most common optional car insurance coverages to consider:
- Roadside Assistance: Provides help if your car breaks down or you run into trouble on the road. It typically covers towing, flat tire changes, jump-starts, lockout assistance, and fuel delivery.
- Rental Reimbursement: Covers the cost of a rental car or alternative transportation while your vehicle is being repaired after a covered accident.
- New Car Replacement: If your new car is totaled within its first year or two, this coverage ensures you receive enough money to replace it with a similar new vehicle rather than just its depreciated value.
- Windshield or Full Glass Coverage: Covers the repair or replacement of a damaged windshield or car windows without affecting your main deductible.
- Rideshare Insurance: Bridges the gap between your personal car insurance and the commercial coverage provided by rideshare companies like Uber and Lyft.
Are Optional Coverages Worth It?
While optional coverages add to your premium, they also provide valuable convenience and peace of mind. They’re especially useful if:
You drive long distances or in high-risk conditions
You rely heavily on your vehicle for work or daily activities
You want to avoid surprise expenses after breakdowns or accidents
However, if your credit card, auto club, or manufacturer warranty already includes benefits like roadside assistance, you can skip overlapping coverages.
How to Choose the Right Car Insurance Coverage
Selecting the right auto insurance coverage means balancing cost, protection, and personal needs:
Vehicle type: Newer or financed cars typically need full coverage.
Budget: Higher deductibles lower your premium but increase out-of-pocket costs.
Risk level: Consider your driving habits, commute, and parking situation.
State laws: Start with required minimums, then build up protection.
When comparing providers, review customer satisfaction ratings, claim response times, and financial stability to find a company that meets your needs.
Frequently Asked Questions
What are the main types of car insurance coverage?
The main types include liability, collision, comprehensive, uninsured/underinsured motorist, and PIP or MedPay. Optional coverages like gap, roadside assistance, and rental reimbursement offer added protection.
What coverages are considered full coverage?
“Full coverage” typically refers to a policy that includes liability, collision, and comprehensive insurance. Some drivers also include uninsured motorist and PIP coverage for even broader protection.
Is it better to have collision or comprehensive coverage?
Most drivers benefit from having both, especially for newer vehicles:
Collision coverage pays for damage to your car from crashes.
Comprehensive coverage handles non-collision events like theft, vandalism, or weather damage.
What’s an appropriate insurance to have for rideshare?
If you drive for services like Uber or Lyft, you need rideshare insurance. It covers you during periods when you’re logged into the app but not actively transporting a passenger — filling the gap between personal and commercial insurance.
What’s the difference between liability and full coverage?
Liability covers damages you cause to others.
Full coverage combines liability, collision, and comprehensive coverage to protect both you and others.
Is comprehensive coverage the same as full coverage?
No. Comprehensive coverage only handles non-collision events like theft or weather damage. Full coverage includes both comprehensive and collision protection.
How much coverage do I need?
At minimum, meet your state’s liability requirements. Many drivers add collision, comprehensive, and UM/UIM coverage for stronger protection.
Does insurance cover rental cars or breakdowns?
Not automatically. You need rental reimbursement for rental cars and roadside assistance for towing or emergency services.
When should I drop comprehensive or collision coverage?
Consider dropping them once your car’s market value is low (under a few thousand dollars) or the premiums exceed potential claim benefits.
What is gap insurance, and who needs it?
Gap insurance covers the difference between your car’s market value and your loan balance if it’s totaled. It’s essential for leased or newly financed vehicles.
