Although different states require different types of insurance and there are several additional options available (such as gap insurance), most basic auto policies consist of: bodily injury liability, personal injury protection, property damage, collision, comprehensive and uninsured/underinsured motorist.
Please note that each type of coverage is priced separately, so there is variability in policy limits and prices.
bodily injury liability
Bodily injury liability coverage applies to injuries caused by you, the designated driver, or the policyholder to another person. You and your family members listed on the policy are also covered when driving someone else’s car with their permission.
It is very important to have enough liability insurance, because if you are involved in a serious accident, you can be sued for a large sum of money. policyholders are encouraged to purchase more than the state-required minimum liability insurance, enough to protect assets such as your home and savings.
medical payments or personal injury protection (pip)
See also: Average condo insurance costs in 2022
This coverage pays for treatment of injuries to the driver and passengers of the policyholder’s car. In its broadest form, PIP can cover medical payments, lost wages, and the cost of replacing services normally performed by someone injured in a car accident. may also cover funeral costs.
property damage liability
This coverage pays for damage you (or someone driving the car with your permission) may cause to someone else’s property. This usually means damage to someone else’s car, but also includes damage to power lines, telephone poles, fences, buildings, or other structures your car hit.
Collision coverage pays for damage to your car that results from a collision with another car, an object such as a tree or telephone pole, or as a result of a rollover (note that deer collisions are covered by comprehensive coverage). also covers pothole damage.
Collision coverage is typically sold with a separate deductible. Even if you are at fault for the accident, your collision coverage will reimburse you for the costs of repairing your car, less your deductible. If you are not at fault, your insurance company may try to recover the amount they paid you from the other driver’s insurance company, and if they are successful, your deductible will also be refunded.
This coverage reimburses you for theft or damage losses caused by something other than a collision with another car or object. comprehensive covers events such as fires, falling objects, missiles, explosions, earthquakes, windstorms, hail, floods, vandalism, riots, or contact with animals such as birds or deer. It will also pay to repair your windshield if it is cracked or broken.
Comprehensive insurance is usually sold with a separate deductible, although some insurers may offer the glass portion of coverage without a deductible.
uninsured and underinsured motorist coverage
Underinsured motorist coverage reimburses you, a family member, or a designated driver if one of you is hit by an uninsured motorist or a driver who doesn’t have enough insurance to pay for your entire loss. This coverage also offers protection in the event a covered driver is the victim of a hit-and-run or, as a pedestrian, is struck by an uninsured or underinsured motorist.
next steps: buy car insurance? Here’s how to find the right policy for you and your car.