A car insurance policy is a bundle of coverages. Knowing what each one does helps you buy what you need and skip what you don’t.
Key facts
- Liability coverage pays for injuries and damage you cause to others, and nearly every state requires it.
- Collision covers damage to your car from a crash; comprehensive covers theft, weather, fire and similar events.
- Uninsured and underinsured motorist coverage protects you if the other driver can’t pay.
- Lenders usually require collision and comprehensive on financed or leased cars.
Car insurance isn’t one thing; it’s several coverages packaged together. Your state sets the minimums, and your lender, if you have one, may add requirements.
The main coverages
| Coverage | What it pays for |
|---|---|
| Bodily injury liability | Injuries you cause to other people |
| Property damage liability | Damage you cause to other people’s property |
| Collision | Damage to your car from a collision, regardless of fault |
| Comprehensive | Theft, vandalism, fire, hail, flooding, hitting an animal |
| Uninsured/underinsured motorist | Your costs if an at-fault driver has no or too little insurance |
| Medical payments or PIP | Medical costs for you and passengers; PIP is required in some no-fault states |
What’s required
Nearly every state requires liability insurance, and some also require uninsured motorist coverage or personal injury protection. Your state’s department of insurance or motor vehicle agency lists the current minimums. Our guide to liability limits explains why the minimum may not be enough.
Optional extras
- Rental reimbursement: pays for a rental car while yours is repaired.
- Roadside assistance: towing, jump-starts and lockouts.
- Gap insurance: covers the difference between your car’s value and what you owe on a loan.
Smart tip
When comparing quotes, match the coverages, limits and deductibles exactly. A cheaper quote with lower limits isn’t a like-for-like comparison.
Choosing your mix
Start with your state’s requirements and any lender requirements, then add protection based on your car’s value and what you could afford to pay yourself. Our guide to what affects car insurance rates explains how to keep the cost down.
Questions we hear
Do I need collision and comprehensive on an older car?
Not always. If the car’s value is low, the premiums plus your deductible may cost more than the car is worth.
What is a deductible?
The amount you pay toward a covered claim before insurance pays the rest. A higher deductible usually lowers your premium.
Does my policy cover rental cars?
Often, your coverage extends to rental cars, but check your policy and your credit card benefits before buying the rental company’s coverage.
This guide is general information, not insurance or legal advice. Coverage, prices and rules vary by insurer and by state, so read your policy documents and check with your insurer, a licensed agent or your state’s department of insurance before you decide.