Different Types of Auto Insurance

A car insurance policy is really a bundle of separate coverages, each with its own limit or deductible. Knowing what each one pays for makes it easier to choose limits, compare quotes and read your declarations page.

Here are the coverages you’ll see most often and what each one does. For the minimums your state requires, see our state-by-state requirements table.

Types of Car Insurance Coverage

Liability Insurance Required

The foundation of almost every policy. Every state except New Hampshire requires some liability coverage, though Florida requires only property damage liability for most drivers. It covers injuries and property damage that you cause to others, up to your limits.

Bodily Injury (BI): Pays for the other party’s medical expenses and lost wages if you are at fault.
Property Damage (PD): Pays to repair the other driver’s vehicle or damaged property (fences, mailboxes).

Worth knowing: State minimums can fall well short of the cost of a serious accident, and you can be held personally responsible for damages above your limits. If you have savings or a home to protect, it’s worth pricing higher limits.

More: how liability limits work and what minimum coverage covers.

Collision Insurance

While liability covers other people’s losses, collision covers your vehicle. If you rear-end another car, back into a pole or hit a guardrail, it helps pay to repair or replace your car, minus your deductible, regardless of who was at fault.

If you have an auto loan or lease, your lender or leasing company will usually require collision coverage. If your car is older and paid off, compare the premium and deductible with what the car is worth before deciding whether to keep it.

More: collision vs. comprehensive coverage and how deductibles work.

Comprehensive Insurance

Often paired with collision, this covers damage to your vehicle caused by events outside of your control. Like collision, it comes with a deductible and is usually required if you are financing.

Theft and vandalism
Natural disasters (hurricanes, floods)
Falling objects (tree branches, hail)
Animal strikes (hitting a deer)
Fire or explosions

More: whether insurance covers a cracked windshield.

Uninsured Motorist (UM/UIM)

The Insurance Research Council estimated that 15.4% of U.S. drivers, more than 1 in 7, were uninsured in 2023, according to the Insurance Information Institute. Others carry only their state’s minimum limits, which might not cover your medical bills or car repairs after a serious crash.

If one of these drivers hits you, UM/UIM coverage helps pay for your injuries and, in some states, damage to your car. Some states require it, and many others include it unless you reject it in writing.

More: how uninsured and underinsured motorist coverage works.

PIP and MedPay

If you or your passengers are injured, these coverages help pay for medical expenses, regardless of who caused the crash.

MedPay: Covers medical and funeral expenses for you and your passengers.
PIP: A broader version required in “no-fault” states. Covers medical expenses plus lost wages and essential services (like childcare if recovering).

More: PIP and no-fault insurance explained.

Gap Insurance

Cars depreciate quickly. If your car is totaled, collision or comprehensive coverage generally pays its actual cash value, not what you paid for it or what you still owe.

If you owe more on your loan or lease than the car is worth, gap coverage (guaranteed asset protection) can pay the difference between the car’s actual cash value and your remaining balance, subject to the policy’s terms.

More: whether gap insurance is worth it and reasons gap insurance might not pay.

Optional Add-Ons

Depending on how you use your car, you might consider a few extras:

Rental Reimbursement: Pays for a rental car while your vehicle is being repaired.
Roadside Assistance: Covers services such as towing, jump-starts and lockout help, depending on the plan.
Rideshare Coverage: Many personal auto policies exclude driving for a rideshare company, so Uber and Lyft drivers often need a rideshare endorsement to fill gaps in the company’s coverage.

More: rental reimbursement coverage and roadside assistance coverage.

More Coverage Guides

Frequently Asked Questions

What is the minimum auto insurance required by law?

Minimum requirements vary by state. Almost every state requires bodily injury and property damage liability, and some also require uninsured motorist coverage or personal injury protection (PIP). Our state-by-state table lists each state’s minimums.

What does “full coverage” actually mean?

“Full coverage” isn’t a single type of insurance you can select on a form. It’s a common term for a policy that combines liability with collision and comprehensive coverage, so it covers damage to your own car as well as your liability to others. It still has limits, deductibles and exclusions, so it doesn’t cover everything.

Do I need collision and comprehensive insurance?

If you finance or lease your car, your lender or leasing company will usually require both. If you own your car outright, they’re optional. Keeping them makes more sense when your car is worth more than you could comfortably pay to repair or replace yourself.

Does my auto insurance cover rental cars?

Often, yes. Many personal auto policies extend your coverages, limits and deductibles to a rental car used for personal travel in the U.S. Coverage varies by policy and may not include rental company charges such as loss-of-use fees, so check your policy before you decline the rental company’s coverage.

Ready to Compare Quotes?

Now that you know what each coverage does, you can ask insurers to quote the same coverage and compare prices fairly.

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