Types of Car Insurance Coverage
Explore the world of car insurance discounts, designed to help you save money while ensuring optimal coverage. From multi-faceted policies to specialized protections, discover how these discounts can benefit your unique needs.
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Laura D. Adams
Insurance & Finance Analyst
Laura Adams is one of the nation’s leading finance, insurance, and small business authorities. As an award-winning author, spokesperson, and host of the top-rated Money Girl podcast since 2008, millions of readers and listeners benefit from her practical advice. Her mission is to empower consumers to live healthy and rich lives by planning for the future and making smart money decisions. She rec...
Insurance & Finance Analyst
UPDATED: Sep 16, 2024
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Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance company and cannot guarantee quotes from any single insurance company.
Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about insurance. Our goal is to be an objective, third-party resource for everything insurance related. We update our site regularly, and all content is reviewed by insurance experts.
UPDATED: Sep 16, 2024
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance company and cannot guarantee quotes from any single insurance company.
Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.
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- Safety Features Discount: Vehicles equipped with advanced safety features like airbags, anti-lock brakes, and backup cameras may qualify for discounts.
- Defensive Driving Discount: Completing a defensive driving course can lead to lower rates, as it demonstrates your commitment to safe driving.
- Low Mileage Discount: If you drive fewer miles than the average driver, you may be eligible for a reduced premium.
- Good Driver Discount: Consistently practicing safe driving habits can earn you savings, and some insurers offer programs that track your driving behavior.
- Loyalty Discount: Staying with the same insurance provider for an extended period can result in discounts, as they reward customer loyalty.
- Pay-Per-Mile Discount: Some insurers offer policies that charge based on the number of miles you drive, potentially saving money for infrequent drivers.
- Occupation Discount: Certain professions or affiliations, such as teachers or members of specific organizations, may qualify for unique discounts.
- Military Discount: Active-duty military personnel and veterans often receive special discounts as a token of appreciation for their service.
- Senior Citizen Discount: Older drivers with a clean driving history may be eligible for lower rates.
- Homeowner Discount: Owning a home can sometimes lead to reduced car insurance costs, as it suggests stability and responsibility.
Liability Car Insurance
What does car insurance cover if you only have liability? Liability car insurance is the most basic type of auto insurance. It covers all costs associated with damage to another person’s property and their medical expenses resulting from an at-fault accident. Liability coverage typically comes in two parts: bodily injury (BI) liability and property damage (PD) liability.
BI helps pay for any medical costs incurred by the injured party if you are found to be at fault in an accident, while PD pays for repairs or replacement of another person’s vehicle or property damaged in the crash.
The minimum required car insurance varies from state to state, so it’s important to research your state’s specific requirements before purchasing liability coverage to determine how much insurance coverage you need.
This table shows the average monthly cost of liability coverage by state.
Monthly Average Liability Rates by State
| State | Monthly Average Liability Rate |
|---|---|
| Alabama | $67 |
| Alaska | $75 |
| Arizona | $63 |
| Arkansas | $68 |
| California | $92 |
| Colorado | $79 |
| Connecticut | $83 |
| Delaware | $79 |
| Florida | $100 |
| Georgia | $75 |
| Hawaii | $67 |
| Idaho | $58 |
| Illinois | $83 |
| Indiana | $67 |
| Iowa | $63 |
| Kansas | $71 |
| Kentucky | $75 |
| Louisiana | $92 |
| Maine | $63 |
| Maryland | $88 |
| Massachusetts | $83 |
| Michigan | $92 |
| Minnesota | $75 |
| Mississippi | $67 |
| Missouri | $71 |
| Montana | $67 |
| Nebraska | $67 |
| Nevada | $88 |
| New Hampshire | $75 |
| New Jersey | $100 |
| New Mexico | $63 |
| New York | $92 |
| North Carolina | $75 |
| North Dakota | $63 |
| Ohio | $71 |
| Oklahoma | $71 |
| Oregon | $83 |
| Pennsylvania | $79 |
| Rhode Island | $88 |
| South Carolina | $75 |
| South Dakota | $63 |
| Tennessee | $71 |
| Texas | $92 |
| Utah | $75 |
| Vermont | $63 |
| Virginia | $79 |
| Washington | $83 |
| West Virginia | $67 |
| Wisconsin | $75 |
| Wyoming | $67 |
| Overall Average | $75 |
While some states are cheaper, the average cost of liability coverage is $75 a month.
Most states require some form of car insurance, and many states require you to have liability coverage. It’s important to understand that liability car insurance only pays for damages to another person’s property or medical bills if you cause an accident. It does not cover the cost of repairing or replacing your own vehicle.
Liability car insurance is recommended for any driver who wants to protect themselves financially in case of an at-fault accident, and again, it’s legally required in most states.
It’s especially important for drivers with fewer financial resources and those with a higher risk of causing an accident due to their driving history or inexperience.
Additionally, anyone who owns a vehicle should consider getting some form of liability coverage to ensure they are protected if they cause an accident. Ultimately, it’s up to each driver to determine the level of coverage that best fits their needs and budget.
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Collision Car Insurance
Collision car insurance is an optional type of auto insurance coverage that helps pay the costs associated with damage to your vehicle in an at-fault accident. It covers repairs to any vehicles involved in the accident and might even cover a rental car if your vehicle needs to be repaired or replaced after an incident.
What does car insurance do if you have collision insurance? This type of coverage can help protect you from costly expenses related to repairing your own car, such as labor costs and parts replacement fees. It also acts as a financial backstop for other drivers who may have caused the accident if they carry low liability limits, helping you stay financially secure even when another driver is found liable.
Collision coverage typically comes with a deductible, meaning you’ll need to pay a certain amount out of pocket before your insurance kicks in.
Collision coverage is recommended for any driver who owns a newer car, or a car they couldn’t afford to replace after an accident.
This type of coverage helps protect the investment you’ve made in your car and ensures you won’t be left paying out of pocket if it’s damaged in an accident that was your fault.
It’s important to note that collision coverage only pays for repairs or replacements related to an accident. It does not cover damage caused by other factors such as theft, vandalism, weather events, or natural disasters. Comprehensive coverage may be a better option for you if you live in an area prone to these incidents.
Comprehensive Car Insurance
Comprehensive car insurance is an optional auto insurance coverage that helps pay for damage to your vehicle caused by non-accident situations such as theft, vandalism, weather events, and natural disasters.
How does auto insurance work if you have comprehensive? This coverage can help protect you financially if your car is stolen or damaged by a hail storm or other event outside your control. It typically comes with a deductible, meaning you’ll need to pay a certain amount out of pocket before your insurance kicks in.
Comprehensive car insurance is recommended for any driver who wants to protect their investment in their vehicle from external factors beyond their control. This type of coverage also may be wise if you live in an area prone to storms, floods, earthquakes, or other natural disasters.
Unlike collision coverage, comprehensive coverage does not pay for repairs or replacements related to an at-fault accident. Learn more about collision vs. comprehensive car insurance.
It only pays for damage caused by non-accident situations such as those listed above. If you’re looking for protection for all possible incidents, it’s recommended that you purchase both collision and comprehensive coverage. A car insurance policy featuring liability, collision, and comprehensive coverage is known as a full coverage car insurance policy.
Personal Injury Protection (PIP)
Personal Injury Protection (PIP) is an optional type of auto insurance coverage that helps pay for medical and other expenses related to injuries sustained in an at-fault accident.
This coverage can help cover the costs associated with treatment, such as doctor visits, physical therapy, prescription medication, and lost wages from missed work days.
PIP covers both you and your passengers regardless of who was at fault for the accident. Additionally, it may offer protection in some cases if you are injured by a car while riding a bicycle or walking across the street.
PIP is recommended for anyone who owns a vehicle as it can provide financial security in the event of an accident. It can also help cover expenses related to medical treatments not covered by other types of insurance, such as long-term care or rehabilitation.
When choosing a PIP policy, it’s important to compare prices and coverage levels among different companies, as some may offer more extensive protection than others.
Additionally, it’s wise to determine if your health insurance covers any costs associated with an at-fault auto accident.
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Uninsured/Underinsured Motorist Coverage
Uninsured or underinsured motorist coverage is an optional type of auto insurance coverage that helps protect you if you’re injured or your vehicle is damaged by another driver who does not have adequate insurance.
It pays for medical expenses, lost wages, and property damage regardless of who was at fault in the accident. This type of coverage comes in handy when the other motorist doesn’t carry liability insurance or their policy doesn’t cover all of your financial losses.
Without uninsured/underinsured motorist coverage, you would be responsible for paying out of pocket for any costs related to the accident, even if it wasn’t your fault. This can put a significant strain on your finances at a difficult time.
Uninsured/underinsured motorist coverage is recommended for any driver who wants to protect themselves from financial loss in the event of an accident with an uninsured or underinsured motorist.
If you’re wondering, “does insurance cover a hit-and-run?” The answer is yes as long as you have uninsured motorist coverage.
Medical Payments (MedPay) Coverage
Medical payments (MedPay) coverage is an optional type of auto insurance coverage that helps cover medical expenses for the policyholder, passengers in their vehicle, and pedestrians involved in an accident with the insured driver.
MedPay pays for medical treatment regardless of who was at fault for the accident, so it can be a great way to protect yourself from unexpected costs related to medical treatments.
This coverage may help pay for ambulance rides, hospital stays, prescription medications, physical therapy, prosthetics, and other medical services due to an auto accident. It also extends to any other occupants of your car, such as children or other family members.
When considering whether or not you need this type of coverage, it’s important to compare rates and coverage levels among different insurance companies.
Additionally, it’s wise to determine if your health insurance policy covers any costs associated with an at-fault auto accident. This could reduce the amount you need to pay out of pocket for medical bills.
Ultimately, MedPay is a great way to provide yourself with financial security in the event of an accident. It can be especially beneficial for those who are more likely to be involved in accidents due to age or lack of driving experience and want additional protection against costly medical treatments.
In addition, MedPay can also help cover expenses related to medical treatments not covered by other types of insurance, such as long-term care or rehabilitation.
Therefore, anyone considering purchasing auto insurance should consider adding MedPay to their policy to help them know what to do after a car accident.
Other Types of Car Insurance Coverage
Now that you know the main types of car insurance, it’s time to discuss some lesser-known coverages you may come across in your research. These policies include:
Gap Insurance
Gap insurance is a type of coverage that pays the difference between what you owe on an auto loan and what your car is worth in the event of a total loss due to an accident or theft.
It protects the lender or owner from taking a financial hit if they have to replace the vehicle at its current value rather than its original purchase price. Gap insurance can come in handy if you’re leasing a car with a high depreciation rate, such as a luxury model or electric vehicle. Learn about how much gap insurance costs.
Umbrella Insurance
Umbrella insurance is a type of coverage that provides an extra layer of protection in the event of an accident. It covers medical bills, property damage, and other costs associated with a lawsuit that might arise from an accident you’re involved in.
Rental Reimbursement
Rental reimbursement is a type of coverage that helps to cover the costs associated with renting a vehicle while your car is being repaired after an accident or other covered event. This coverage can be helpful if you depend on your vehicle for daily transportation and need to rent one in the interim.
Emergency Roadside Assistance
Emergency roadside assistance is a type of coverage that provides help with common car troubles, such as a dead battery or flat tire.
This coverage typically includes towing services, lockouts, and fuel delivery. It’s a great option for those who often find themselves on the road and don’t want to worry about what might happen if their car breaks down.
Usage-Based Insurance (UBI)
Usage-based insurance (UBI) is a type of coverage that uses telematics technology to track your driving behavior and provide you with discounts based on how much and how safely you drive.
This type of policy is becoming more popular as insurers use the data collected from UBI policies to create personalized plans for their customers. UBI can be particularly useful if you’re an infrequent driver and/or a safe driver who doesn’t take risks behind the wheel.
Read more: Lesser Known Car Insurance Discounts
Non-Owner Car Insurance
Non-owner car insurance is a type of policy specifically designed for those who don’t own a car. It provides coverage if you rent or borrow someone else’s car, and will pay for any damages you cause to other drivers in an accident.
This type of coverage can be particularly useful if you’re renting cars often or living in a shared housing situation where you might have access to other people’s vehicles.
SR-22 Insurance
SR-22 insurance is a type of coverage required by certain states for drivers convicted of driving under the influence (DUI) or other serious violations. The policy helps to prove to the state that you’re financially responsible and compliant with car insurance regulations.
In most cases, SR-22 insurance will be required for a period of three years before your license is reinstated.
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Types of Car Insurance Coverage: The Bottom Line
Navigating the world of car insurance can be confusing, but understanding the different types of car insurance available can help you make an informed decision about your policy.
Consider the types of coverage you need and compare policies from multiple insurers to find a plan that works for both your budget and lifestyle. This will help ensure that you have the protection you need in case of an accident or other incident involving your vehicle.
If all else fails, speak with a qualified insurance broker who can answer your questions and guide you toward a plan that meets your needs.
Frequently Asked Questions
What is car insurance?
Car insurance is a contract between you and an insurance company that provides financial protection in case of damage, theft, or accidents involving your vehicle. It helps cover the costs of repairs, medical expenses, and liability claims.
What are the five types of auto insurance?
The five types of auto insurance are liability, collision, comprehensive, uninsured/underinsured motorist coverage, and medical payments.
What is full coverage insurance?
Full coverage insurance is an auto insurance policy providing both liability and physical damage protection. This type of coverage typically includes liability, collision, and comprehensive coverage.
What is the most common car insurance?
Liability insurance is the most common type of car insurance. It covers any damages that a driver might cause to other people or property while operating their vehicle.
Is comprehensive insurance the same as full coverage?
Comprehensive insurance is not the same as full coverage. Comprehensive insurance covers damage caused by events other than a collision, such as fire, theft, or vandalism.
What is collision coverage on a car?
Collision coverage is an optional type of auto insurance that covers physical damage to your car caused by a collision with another vehicle or object. This coverage typically pays for repairs to your car minus any applicable deductibles.
Is it worth having fully comprehensive insurance on an old car?
It depends on several factors, such as the age of your car and its value. If the cost of comprehensive coverage is more than the value of your car, then it may not be worth purchasing full coverage insurance. Additionally, if you have an older vehicle with a low Kelley Blue Book Value (KBBV), it may not be worth buying fully comprehensive coverage. Ultimately, it’s up to you to determine whether or not fully comprehensive insurance is worth the cost for your particular situation.
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Laura D. Adams
Insurance & Finance Analyst
Laura Adams is one of the nation’s leading finance, insurance, and small business authorities. As an award-winning author, spokesperson, and host of the top-rated Money Girl podcast since 2008, millions of readers and listeners benefit from her practical advice. Her mission is to empower consumers to live healthy and rich lives by planning for the future and making smart money decisions. She rec...
Insurance & Finance Analyst
Editorial Guidelines: We are a free online resource for anyone interested in learning more about insurance. Our goal is to be an objective, third-party resource for everything insurance related. We update our site regularly, and all content is reviewed by insurance experts.