The most common types of car insurance are liability insurance, comprehensive coverage, collision coverage, uninsured/underinsured motorist coverage (UM/UIM), personal injury protection (PIP) and medical payments coverage (MedPay).
Almost every state requires car insurance — typically liability and sometimes PIP and UM/UIM — but the other types can provide essential financial protection and save you money if you’re in an accident.
These are the different types of car insurance, and what each does.
1. Liability insurance
Drivers are required to carry liability insurance to get behind the wheel in most states.
What it covers: If you are found at fault in an accident, liability insurance helps cover the other drivers’ medical and car repair bills. Liability insurance is typically broken into two parts:
- Bodily injury liability: Pays for medical expenses, up to your policy’s limits.
- Property damage liability: Covers damage to vehicles and other types of property.
If you buy only one type of car insurance, it’s usually liability. Your state’s car insurance mandates certain liability limits, which is the maximum amount your insurer will pay for damage you cause to someone else. If the damage exceeds your limits, you’ll be required to pay the remainder out of your own pocket.
Who needs it: Nearly everyone needs liability insurance. New Hampshire is the only state that doesn’t require it, but it’s still a good idea to have this coverage.
How much does it cost? You should expect to pay $50 to $90 per month for the state-mandated minimum coverage, but your rate will depend largely on your carrier, the limits required by your state, and personal factors like your driving record and how often you drive.
Read more: Find cheap car insurance
2. Collision coverage
When you’re shopping for insurance, you’ll likely come across the term “full coverage.” Made up of both collision and comprehensive coverage, full coverage insurance helps protect your vehicle against various types of damage.
Collision insurance is what it sounds like — it provides coverage after you have a car accident, whether that’s with another car or a stationary object.
What it covers: Repairs to your vehicle after an accident with another vehicle or other property.
Who needs it: If you lease or finance your vehicle, your lender will usually require collision coverage. But even if you own your vehicle outright, carrying collision insurance is a good idea if your vehicle is new or has a higher value than your plan’s required premium.
3. Comprehensive coverage
The second component of full coverage is comprehensive. This pays for damage that may befall your vehicle in any scenario that isn’t an accident, providing financial protection from Mother Nature and anybody else who may damage your car.
Although comprehensive coverage is usually included in full coverage insurance, some drivers opt to purchase it as a standalone add-on to their liability coverage.
What it covers: Comprehensive insurance pays for damage to your vehicle that isn’t the result of a collision, meaning it covers things like vandalism, theft, contact with an animal or a severe weather event.
Who needs it: Lenders generally require comprehensive coverage on leased or financed vehicles. As with collision insurance, it’s usually a good idea to carry this coverage as long as your vehicle hasn’t depreciated significantly.
Jerry insightBoth comprehensive and collision insurances usually require deductibles. This is an amount that you must pay before insurance will cover damage to your car. A higher deductible typically gets you a lower premium, while a lower deductible can mean a higher premium.
How much does full coverage cost?
Full coverage car insurance costs $314 per month on average, according to data from real Jerry customers. Your costs depend on factors like where you live, the vehicle you drive, your driving record and claims history.
More: Compare cheap full coverage car insurance
4. Uninsured/underinsured motorist coverage
Uninsured/underinsured motorist coverage is required in almost half of the states. This insurance is your financial protection if you’re in an accident with an uninsured driver. About 15% of drivers in the United States don’t carry car insurance, according to a 2023 report from the Insurance Research Council.
What it covers: Uninsured motorist coverage (UM) pays for your costs if you’re in an accident caused by a driver who doesn’t carry their own auto insurance policy. Underinsured motorist coverage (UIM) protects you if the other driver has insurance but their coverage limits aren’t high enough to cover your expenses.
UMBI vs. UMPD
In most states, uninsured/underinsured motorist coverage is only required for bodily injury claims. However, in some states, uninsured/underinsured motorist coverage is also required for property damage. UMPD/UIMPD is unavailable in about half of the states in the U.S.
Who needs it: Even if your state doesn’t require UM/UIM, it’s a good idea to have it if you live in an area with a high percentage of uninsured drivers. Find out whether your state has a higher-than-average rate of uninsured drivers via the Insurance Information Institute.
5. Personal injury protection
If you live in a no-fault state, you must carry personal injury protection (PIP). This coverage is designed to ensure drivers’ medical expenses are paid and reduce the likelihood of lawsuits over minor injuries. In theory, insurance costs would be lower if everyone carried PIP, but that’s not always true in practice.
What it covers: Personal injury protection pays the medical expenses for the policyholder and any injured passengers after a car accident, even if they don’t have health insurance. PIP also pays for lost income, ambulance services, childcare expenses and funeral expenses related to the accident.
Who needs it: Twelve no-fault states require drivers to carry PIP. Even if it’s not required, you may want to add it to your policy for extra protection, especially if you don’t have health coverage or your health insurance has a high deductible.
6. Medical payments
Medical payments insurance is PIP’s less robust cousin. Like PIP, it covers medical expenses after an accident. Unlike PIP, it doesn’t include lost wages or essential services like childcare after the accident. It’s is available to purchase in most states and required in only a select few.
What it covers: MedPay supplements your health insurance and covers medical expenses for you and your passengers after an accident, whether you’re the at-fault driver or not. It can also pay out if you’re hit in an accident as a pedestrian, or if you’re in an accident in someone else’s vehicle.
This coverage pays for post-accident doctor and hospital visits, ambulance expenses, rehab and nursing care and some medical equipment.
Who needs it: If you can’t afford the out-of-pocket costs that MedPay covers, investing in MedPay is a good idea. It can also cover a health insurance deductible, which is a common use case. It’s required for drivers in Maine and New Hampshire and is available in every state except Minnesota, New York, North Dakota, and Oregon.
Other types of car insurance
Most insurance companies offer a range of optional types of coverage that can be added to your policy. These add-ons allow you to customize your policy to get exactly the coverage you need. Options include:
- Gap insurance: If your vehicle is totaled or stolen, gap coverage pays the difference between your car loan or lease balance and the actual cash value insurance payout.
- New vehicle replacement coverage: After a total loss, a new car replacement will cover the cost of replacing your vehicle with the same make or model that you previously had. This coverage requires a deductible payment.
- Rental car reimbursement: This coverage pays for a rental vehicle or other transportation expenses while your car is in the shop after a covered loss.
- Roadside assistance: Also known as towing and labor coverage, roadside assistance offers towing, flat tire repairs, locksmith services and jump-starting a battery while you’re on the road.
- Non-owner insurance: You can purchase a non-owner policy if you don’t own your own vehicle but frequently drive a rental vehicle or borrowed car.
- SR-22 insurance: While not technically a type of insurance, your state may require an SR-22 certificate if you’ve been convicted of a serious violation. It certifies that you carry at least minimum liability insurance and your insurer will file it on your behalf.
- Rideshare insurance: If you drive for a rideshare company or a food delivery service, you’re likely not covered by your regular insurance policy while on the clock. Ask your insurance agent if your provider offers rideshare coverage.
How to get the right type of insurance
When you’re building out your personal insurance policy, consider liability needs, whether you need full coverage, and any optional coverage types you want to add to your policy.
More: Compare the best car insurance companies
What type of car insurance is required?
All states except New Hampshire require drivers to purchase at least minimum liability insurance, which includes both bodily injury liability and property damage liability. Some states also mandate uninsured motorist coverage, personal injury protection (PIP), and/or MedPay.
If you’re leasing or financing your vehicle, your lender will likely require you to purchase collision and comprehensive coverage until it’s paid off.
How much liability coverage do you need?
When you’re shopping for car insurance, your policy must include liability coverage that meets your state’s requirements. For the best protection, some experts suggest raising your liability limits to $100,000 of bodily injury liability per person, $300,000 of bodily injury liability per accident, and $100,000 of property damage liability per accident.
More: How much car insurance do I need?
Do you need full coverage?
If significant vehicle repairs or a total loss would put you in a financial bind, buying comprehensive and collision coverage is a good idea. If your vehicle is leased or financed, full coverage will typically be a requirement.
Kayda Norman is an insurance writer and editor with more than 12 years of content experience. She previously worked at NerdWallet as an insurance writer and content management specialist. She has covered a wide range of insurance topics such as high-risk drivers, auto insurance rate factors, and credit-based insurance scores. Her work has been featured in The New York Times, The Washington Post, and USA Today.
Annie is a writer and editor at Jerry with more than a decade of experience writing and editing digital content. Before joining Jerry, she was an assistant assigning editor at NerdWallet. Her past work has appeared in the Associated Press, USA Today and The Washington Post. Her work has been cited by Northwestern University and Harvard Kennedy School. Annie served as a spokesperson for NerdWallet during her time at NerdWallet and has been featured in New York Magazine, MarketWatch and on local television and radio stations.
Previously, she worked at USAA and newspapers in Minnesota, North Dakota, California and Texas. She has 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.
