6 Common car insurance coverage options

You have many car insurance coverage options, but depending on where you are in life, some may make sense for you while others may not. Some may be required by the state in which you live, or your lender or leasing company may require others.

Before you decide which car insurance coverage options you need, take a few minutes to learn about six common types of car insurance.

6 Common Car Insurance Coverage Options

1. Liability insurance

Required by most states, this is perhaps the most important coverage to have. If you cause an accident, liability coverage pays the expenses of the other driver and their passengers, including the cost of property damage (repairing their car) and bodily injury (paying for their medical bills). It does not cover the cost of your injuries or damage to your vehicle; that’s covered by medical payments and collision coverage.

• Example: Let’s say you swerve to avoid a road hazard and cause another car to crash. Your liability coverage will pay the medical bills of the other driver and occupants, and will repair or replace their vehicle, up to the limits of your policy.

2. Medical payments coverage (MedPay)

MedPay covers the medical expenses for you and your passengers, regardless of who caused the collision. In some states, Personal Injury Protection, a broader coverage which includes medical payments, but also lost wages, childcare and funeral expenses, may be available.

• Example: Let’s say your car slides into the ditch and you’re taken by ambulance to the hospital. MedPay will cover the cost of the ambulance, any X-rays, plus doctor and hospital bills.

3. Uninsured motorist coverage

While auto insurance is legally required in most states, there are still people who drive without it. In fact, it’s estimated that about one in seven drivers¹ is uninsured. Uninsured motorist coverage will pay for your medical bills and repairs to your vehicle if you’re hit by someone who has no car insurance at all.

• Example: Let’s say someone rear ends you at a stop light. If the person who hits you is driving without insurance, your uninsured motorist coverage will cover damage to your car and your medical expenses.

4. Underinsured motorist coverage

This coverage will pay for your medical bills and repairs to your vehicle if you’re hit by someone who has insurance, but not enough coverage to completely pay for the damage to your vehicle or the cost of your medical expenses.

• Example: If someone causes an accident that requires you to be hospitalized, the cost of your care may exceed the limits of their policy. In this case, your underinsured motorist coverage will take over to pay all your expenses.

5. Collision coverage

Collision covers the cost to repair or replace your vehicle if it is damaged in an accident. You’re covered even if you hit a pothole or a tree instead of another vehicle. This coverage is typically required if you have an auto loan or a lease. If you have a new or expensive vehicle, or if you rely on your vehicle and can’t afford an expensive repair bill if something happens, this coverage may be worthwhile to have.

• Example: If you swerve to avoid another vehicle and hit the highway guardrail, your collision coverage will pay to repair or replace your vehicle.

6. Comprehensive coverage

This car insurance coverage option pays to repair or replace your vehicle if it is damaged by something other than a collision. Examples include hail, flooding, or other natural disasters; theft or vandalism; or damage caused by hitting an animal like a deer or moose. It’s usually required for leased or financed cars, but if not, it still may be a good idea for you.

• Example: If your car’s windshield is cracked by a rock, comprehensive coverage will pay for the cost of repairing or replacing it. If a tree falls on your garage, your homeowner's insurance will cover damage to the garage, but you’ll need comprehensive coverage to repair or replace your vehicle.

Choose the right car insurance coverage options for you

Having the right type of car insurance helps protect you and your assets. Paying for only the type of insurance you need helps you spend your money wisely. You can also vary the coverage limits and your deductible to get the protection you need at a price you can afford.