The most common types of auto insurance coverage are liability insurance, comprehensive coverage, collision coverage, uninsured/underinsured motorist coverage (UM/UIM), personal injury protection (PIP) and medical payments coverage (MedPay).
Although you need to buy car insurance to drive in almost every state, only certain coverage types are required. And even if you aren’t required to buy it, certain coverage might save you hundreds of dollars if you get into an accident.
To help determine the coverage you need, we’ve created a guide on the most common types of car insurance coverage — including what it covers, who needs it and how much it costs on average.
Liability insurance: Covers your actions
Drivers are required to carry liability insurance to get behind the wheel in most states.
What it covers: If you cause a collision and are found at fault, liability insurance helps cover the other drivers’ accident-related expenses. 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.
Who needs it: Nearly everyone. New Hampshire is the only state that doesn’t require liability insurance, but it’s still a good idea to have this coverage. In all other states, you must have liability insurance to legally drive.
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.
Collision coverage: Protection from accidents
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.
What it covers: Collision insurance pays for damage to your vehicle after an accident with another vehicle or stationary object.
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.
Comprehensive coverage: Non-collision protection
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.
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.
How much does full coverage cost?
Full-coverage costs an average of $160 to $200 per month. Your costs depend on factors like where you live, the vehicle you drive, your driving record and claims history.
Uninsured/underinsured motorist coverage: Extra protection
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: UM or both UM/UIM is required in about half of the country’s states. But even if your state doesn’t require this coverage, 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.
Personal injury protection: Coverage for medical bills
What it covers: Personal injury protection (PIP) 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.
Medical payments: For a quicker payout if you’re injured
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’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 coverage
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 (like a DUI). 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.
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.
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.
Everett Cook is an award-winning journalist and editor with more than 10 years of experience across a variety of industries. In editing for Jerry, Everett’s mission is to help readers have a better understanding of the costs of owning or leasing a car and to better understand their vehicle in terms of insurance and repairs. Prior to joining Jerry, Everett was an editor for Axios. His previous work has been featured in The New York Times, The Los Angeles Times, The San Francisco Chronicle, The Atlantic, Atlantic Re:think, The Boston Globe, USA Today, and others. He’s also been a freelance writer and editor with experience in SEO, audience building, and long-term content roadmaps. Everett is a proud graduate of the University of Michigan.
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.
