What your car insurance covers depends on the amount you buy. At minimum, car insurance covers damage you do to other people and property on the road. A more robust policy covers your own damage and injuries, regardless of who caused them, plus theft, vandalism and weather damage.
This is a breakdown of common incidents that car insurance covers, what it usually doesn’t cover, and what can fill those gaps.
What car insurance does cover
Car insurance helps cover the major, unexpected, expenses that come with owning and driving a car — such as crashing it, whether you were at fault or not. Some types of coverage are required by your state, while others are optional but can offer extra peace of mind.
The following scenarios are covered by at least one of the six most common types of car insurance.
Damage to someone else’s car or property: If you’re found at fault in an accident that damages someone else’s car or a structure like a fence, utility pole or the city’s equipment, your property damage liability policy (PD) pays for repairs, up to your policy’s limits. PD is required in almost every state.
Medical bills for others: If you cause an accident that injures another person, including a pedestrian, your bodily injury liability insurance (BI) pays their medical bills, up to your policy limits. BI is another coverage that most states require.
Damage to your car: Collision insurance pays to repair your car after a covered accident, regardless of who caused it. This type of insurance is usually part of a full coverage insurance policy, which no states require — but loans and auto lease contracts do. You must pay a deductible for your collision insurance to kick in, an amount specified in your policy. If another driver is found at fault for the accident, their PD may pay for some or all of the repairs; if they have no insurance or not enough, and you have uninsured or underinsured motorist protection, that coverage can also pay for damage to your car.
Your own medical bills: Injuries you sustain in an accident can be covered by medical payments (MedPay) or personal injury protection (PIP) insurance regardless of who caused the accident. PIP provides broader coverage that can include lost wages and essential services. Some states require one or the other, but they’re optional in many states, and required limits are often low.
Accidents with uninsured drivers: If you’re hit by a driver who doesn’t have insurance, or doesn’t have enough to cover your damages, uninsured/underinsured motorist coverage (UM/UIM) can help. This type of insurance typically pays for your medical expenses and repairs to your vehicle. A number of states require UM/UIM coverage.
Hit-and-runs: Collision and UM/UIM can help pay for car damage after a hit-and-run. If you have collision insurance, it pays for damage to your car regardless of fault, so the fact that it’s a hit-and-run isn’t a factor in the payout. Insurers may treat these incidents as uninsured motorist accidents, meaning that coverage may also apply.
Auto theft and vandalism: Comprehensive coverage pays if you’re a victim of theft or vandalism. This is part of full coverage car insurance and requires a deductible before it pays out.
Weather damage and animal collisions: Damage caused by nature is also covered by comprehensive insurance. This coverage is particularly helpful for those who live in areas with frequent floods, fires or animal encounters.
Jerry insightA full coverage car insurance policy, with UM/UIM and MedPay or PIP included, is likely to cover all of the scenarios listed above, though if any of these coverages runs out, you’ll have to pay the remainder.
Who car insurance covers
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You, the policyholder
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Other drivers listed on your policy
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People with permission to drive your car
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Passengers
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Injured people in another car
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Pedestrians you injure
What does car insurance not cover
Car insurance can protect you from many major expenses, but some cases fall outside typical coverage. Just like homeowners insurance won’t cover a worn-out faucet, your auto policy won’t pay for a broken alternator. Here are some common expenses that typically aren’t covered by car insurance:
Wear and tear: It would be nice if car insurance would pay for a new set of tires after yours have seen six years of road time, but it’s not going to happen. Car insurance doesn’t pay for worn down brake pads, replaced struts, rust or interior wear such as torn seats. Unless your car is under warranty, expect maintenance to be an out-of-pocket expense.
Mechanical breakdowns: If your 10-year-old car’s transmission fails one day while you’re out on the road, insurance shouldn’t be your first call. Things like engine failure, a faulty fuel pump or a broken timing belt aren’t covered under most standard car insurance policies. However, if your car is under warranty (up to 10 years, in some cases), it’s worth checking with the manufacturer to see if it covers your mechanical breakdown.
Stolen items that aren’t your car: It’s wise to take valuables with you any time you leave your car because your policy won’t cover them if they’re stolen from your car or in your car if it’s stolen. Stolen belongings are covered by your homeowners or renters insurance policy, if you have one.
Damage while driving for a rideshare company: An accident that happens while you’re driving for Uber or Lyft is usually not covered by your insurance policy. Ridesharing drivers must carry specialized insurance when driving for a rideshare company.
Intentional damage: As a general rule, insurance won’t pay for any damage you inflict to a covered vehicle. If you intentionally damage your car and submit a claim for accidental damage, that’s insurance fraud.
More: The best car insurance companies
Optional coverages that fill insurance gaps
Offering to pay for intentional damage goes against the whole insurance business model, but you can buy add-ons to fill some common gaps.
Mechanical breakdown insurance: Mechanical breakdown is similar to a car warranty: It pays for repairs if your car breaks down or needs replacement parts during the coverage window. But it usually covers more than an extended warranty. Requirements can be strict — you typically must buy this kind of insurance in the first year that you own the vehicle, but you can renew it for several years.
Gap insurance: For a leased or financed vehicle that’s totaled, the typical required full coverage insurance policy pays the actual cash value (ACV), which may be less than the amount you owe on it. Gap insurance pays the difference so you don’t have to.
Rideshare insurance: When you’re between assignments as a rideshare driver, neither your policy nor the rideshare company’s policy may cover you. Rideshare insurance offered through your insurer is like a personal policy with an add-on for your side gig, and can bridge the gap to be sure you’re protected between rides.
Special equipment coverage: Equipment added to your car after you purchase it is generally not included in your regular car insurance coverage, so some insurers offer additional special equipment coverage. This insurance can help replace a snazzy stereo system, enhanced tires or custom flames painted on the sides.
More: Compare car insurance quotes
How much car insurance do I need?
The amount of car insurance you buy depends on your state’s requirements, risk tolerance and finances.
You may be satisfied with the minimum required insurance if you have an older car that you drive once or twice per week, especially if you have enough savings to pay for an emergency repair or medical bill. Maybe you buy the state-mandated insurance but bump up the liability limits in case you damage a more expensive vehicle.
Most experts recommend full coverage car insurance — and most drivers carry it — because it’s a more robust policy with less risk of having to pay a sudden, hefty bill yourself, but full coverage costs more than liability.
Here are some quick steps to determine how much coverage you should buy:
- Calculate your net worth. This is the amount of money you have, including in retirement, investments including property and bank accounts; minus the debt you owe. This is the amount of money you want to protect.
- Choose liability limits accordingly. If your net worth is $50,000, you want liability limits of at least that much, because that means an insurer will pay up to that amount if you cause an accident.
- Consider full coverage. Lenders require drivers with leased or financed vehicles to carry full coverage, but it’s also a smart choice if you consider your vehicle a valuable asset. If you own your car outright, ask yourself, if it was damaged — whether by vandalism, a natural disaster or in an accident — would you want to repair or replace it? If yes, then full coverage is likely the right choice.
- Consider add-ons. Drivers with a net worth above what an insurer offers may purchase an umbrella policy, rideshare drivers can purchase the rideshare add-on, drivers in new leased or financed vehicles may add a gap policy, and those concerned about being stranded far from home can include roadside assistance.
Annie is a writer and editor at Jerry and has more than a decade of experience writing and editing digital content. Before joining Jerry, she was an assistant assigning editor at NerdWallet, where she covered loans. Previously, she worked at USAA and newspapers in Minnesota, North Dakota, California, and Texas. She holds a bachelor’s degree in journalism from the University of Minnesota.
Lacie Glover is a Lead Writer and Editor with sixteen years’ experience in the insurance category. Prior to Jerry, she spent more than a decade on NerdWallet’s content team writing, editing and then overseeing the auto insurance category, as well as dabbling in other insurance and automotive topics. Prior to her career in the online personal finance content space, Lacie spent time in the hard sciences, in clinical research and chemistry labs. She has a bachelor’s degree from Colorado State University.
