types of car insurance

Different types of car insurance

Car insurance comparison shopping might be difficult. However, finding the best policy for your needs may be accomplished with a little study. Depending on your location and whether you lease or loan your car, your insurance coverage may differ from someone else’s. There are six standard types of auto insurance, plus a few more kinds of auto coverage you might wish to take into account.

The best policy for you will depend on your financial condition and your knowledge of the requirements. In this article, the answers to the following questions will be discussed.

  • What are the basic types of car insurance policies?
  • Other types of auto insurance
  • What car insurance do I need and how much should I get?

Let’s dive in!

types of car insurance

Read more: Ways to find good and cheap car insurance


What are the basic types of car insurance policies?

Six various types of auto insurance are necessary. What they’re all about is as follows.

  • Liability coverage
  • Uninsured/underinsured motorist coverage
  • Personal injury protection
  • Medical payments coverage
  • Collision coverage
  • Comprehensive coverage

Liability coverage

Except for New Hampshire and Virginia, every state requires liability insurance. In Virginia, you must pay an uninsured motorist’s vehicle fee if you don’t have liability coverage.

Both the bodily injury liability coverage and the property damage liability coverage that is typically included with this form of insurance can help to financially protect you in the case of an accident against third-party claims.

Your bodily injury liability insurance would help shield you from the expense of the other driver’s claims for damages, such as medical bills and lost earnings if you were to cause an accident. The cost of any damage you did to the other person’s property, including their vehicle, would be partially covered by your property damage liability insurance.

Although prices differ by state, the 2022 Auto Insurance Database Report, the most recent data from the National Association of Insurance Commissioners, or NAIC, estimates that the average liability premium statewide was about $650 in 2019.

Read more: Understanding force-placed insurance and why lenders always get you one?

Uninsured/underinsured motorist coverage

Uninsured or underinsured motorist protection may also be included in your liability insurance. This sort of insurance safeguards you against other drivers directly, in contrast to the other two types of liability coverage listed above. It compensates you if you suffer injuries in a hit-and-run collision or from a driver whose liability insurance is insufficient to cover your damages or is nonexistent.

Over 20 states and the District of Columbia require uninsured motorist coverage. Check your state’s financial responsibility rules to ensure you have enough coverage as minimum coverage needs differ from state to state.

Personal injury protection

No-fault insurance and no-fault states are terms you may have heard. No of who was to blame for the collision, every driver in a no-fault jurisdiction is required to claim with their insurance provider. In these states, personal injury protection, or PIP, is a legal requirement for all drivers. PIP assists in paying for costs like medical bills, lost wages, and funeral fees for you and any car passengers.

Read more: Understanding car insurance quotes

Medical payments coverage

Medical payments insurance, like personal injury protection, aids in covering the costs of your medical care and burial services for you and any passengers in your car. If you are struck by a car while on foot, this insurance may also provide coverage for you. In no-fault or jurisdictions where PIP can be purchased, medical costs coverage is typically an option for PIP and may not be offered. Medical costs coverage, in contrast to PIP, is typically an option.

Make sure you’re not duplicating your insurance coverage because your health insurance may cover many of the exact costs as medical payments coverage.

Collision coverage

If your car is damaged after colliding with something else, such as a car, a tree, or a guardrail, collision coverage can help pay to repair or replace it. If you loan or lease your car, this kind of coverage is typically necessary. Collision insurance is typically not required if your car is paid off. But if you don’t purchase coverage, you can be responsible for paying for pricey auto repairs or, in the worst-case scenario, replacing your automobile.

Your choice of deductible will affect the cost of your collision insurance, which varies by state, insurer, and policy. The NAIC estimates that the national average for collision insurance premiums in 2019 was roughly $381.

Comprehensive coverage

When something other than an accident causes damage or loss, comprehensive insurance helps cover the cost. Theft, vandalism, fire, flying items, earthquakes, windstorms, and hail all fall under this category. Additionally, it can shield you from harm from creatures like deer or birds. Similar to collision insurance, comprehensive coverage is typically not necessary if you own your automobile but is certainly necessary if you lease or finance it. According to the NAIC, the average annual premium for comprehensive coverage in 2019 was roughly $172.

Read more: Understanding auto liability insurance and why you need it

Other types of auto insurance

You might choose to supplement your insurance policy with additional optional coverage, depending on your needs and financial circumstances. The following are other types of auto insurance:

  • Rental reimbursement coverage
  • Towing or emergency road service coverage
  • Gap limit


Rental reimbursement coverage

While your car is being repaired, rental reimbursement coverage enables you to pay for alternate modes of transportation like a rental car or public transportation. This kind of insurance only comes into play when your automobile is damaged in a covered accident; it won’t pay for basic maintenance or a car rental while you’re traveling. Rental reimbursement insurance typically has a daily and cumulative maximum, such as $20 per day, up to $600 overall.

Towing or emergency road service coverage

Roadside breakdown expenses like dead batteries, flat tires, lockouts, or towing your car to a mechanic after an accident might be covered by this optional add-on. Check your policy to see whether this coverage is sometimes automatically included to avoid purchasing additional insurance.

Gap insurance

Consider adding gap insurance to your policy if you run the risk of owing more on your auto loan than the automobile is truly worth. Guaranteed asset protection, often known as gap insurance, help bridge the financial gap between what your insurer will pay if your automobile is declared a total loss (typically the current cash value) and the balance of your auto loan. Gap insurance is often not needed for all drivers, although it can be if you lease a vehicle.

Read more: Review on American Family auto insurance

What car insurance do I need and how much should I get?

The types of auto insurance you need to have depend on several factors. The minimum standards in your state, your financial status, and whether you finance or lease your car are a few of these factors.

Here are a few things to think about when deciding how much coverage to get.

  • Your coverage limits
  • Your deductibles


Your coverage limits

Consider the minimum amount of coverage necessary by your state when deciding on your coverage limits. After then, think about your financial status. As you select greater coverage limitations, your premium price rises. But before you buy the bare minimum amount of coverage to keep your monthly premium cost low, compare the monthly premium cost to the amount you could reasonably expect to spend out-of-pocket in the event of an accident.

Your deductibles

It also applies to deductibles. Your premium will typically be lower if your deductible is bigger. Coverage with a $1,000 deductible, for instance, will normally be less expensive than one with a $500 deductible. Would you, however, have $1,000 on hand to meet the deductible if your vehicle needed repairs?

Read more: How to get the best deal on car insurance?

In conclusion

Spend some time determining the exact types and amounts of auto insurance you require. To find out which forms of coverage are necessary or optional in your state, as well as any minimum required amounts of coverage, visit the website of your state’s transportation agency or insurance commissioner’s office.

When you’re prepared to look, make sure to compare vehicle insurance quotes from different insurance providers to choose a plan that best meets your requirements.

That is all for this article, where the following questions are being answered:

  • What are the basic types of car insurance policies?
  • Other types of auto insurance
  • What auto insurance do I need and how much should I get?

I hope you learn a lot from the reading, if so, kindly share with others. Thanks for reading, see you around!