Car Insurance Coverage Types Explained
Understanding what each coverage type does is the first step to choosing the right policy. Here is a plain-English guide to every major type of car insurance coverage, including what it covers, what it does not, and who actually needs it.
Liability Insurance
What it covers
- + Bodily injury to others you cause in an accident
- + Property damage to others' vehicles or property
- + Legal defense costs if you are sued
What it does NOT cover
- - Your own vehicle damage
- - Your own medical bills
- - Damage caused by uninsured drivers
Who needs it
Every driver. Required by law in 49 of 50 states.
Key limits to know
Expressed as three numbers (e.g. 100/300/100): per-person bodily injury / per-accident bodily injury / property damage in thousands.
Collision Insurance
What it covers
- + Your vehicle damage after a collision with another car
- + Your vehicle damage from hitting an object (fence, pole, tree)
- + Single-vehicle rollover accidents
What it does NOT cover
- - The other driver's vehicle (covered by their collision or your liability)
- - Theft or weather damage
- - Medical bills
Who needs it
Anyone with a loan or lease. Optional for fully owned vehicles under $8,000.
Key limits to know
Your deductible (typically $500 to $1,500) reduces the payout.
Comprehensive Insurance
What it covers
- + Theft of your vehicle
- + Storm, hail, and flood damage
- + Fire damage
- + Hitting an animal (deer, etc.)
- + Vandalism and falling objects
What it does NOT cover
- - Collision damage
- - Damage to other vehicles
- - Personal belongings stolen from the car
Who needs it
Anyone in an area with severe weather, high theft rates, or with a loan or lease.
Key limits to know
Your deductible applies. Typically $100 to $500 for comprehensive claims.
Gap Insurance
What it covers
- + The difference between your loan balance and your car's actual cash value after a total loss
- + Protects you from owing money on a car you no longer have
What it does NOT cover
- - Repairs (only applies to total loss)
- - Your deductible
- - Extended warranties or add-ons rolled into the loan
Who needs it
Anyone who financed more than 80% of the car's value, bought new, or took a long loan term (60+ months).
Key limits to know
Only applies if you are upside-down on your loan at time of total loss.
Uninsured and Underinsured Motorist
What it covers
- + Your injuries and vehicle damage if hit by an uninsured driver
- + Hit-and-run accidents in some states
- + Cases where the at-fault driver's coverage is insufficient
What it does NOT cover
- - At-fault accidents where you caused the damage
- - Standard collision or comprehensive losses
Who needs it
Almost everyone. Roughly 1 in 8 drivers nationwide is uninsured.
Key limits to know
Usually set equal to your liability limits.
Medical Payments (MedPay) and Personal Injury Protection (PIP)
What it covers
- + Your own medical bills after an accident regardless of fault
- + Passenger medical bills
- + Lost wages (PIP only)
- + Funeral expenses in some policies
What it does NOT cover
- - Property damage
- - Vehicle repairs
- - Pain and suffering damages
Who needs it
Required in no-fault states. Recommended if you have limited health insurance.
Key limits to know
Typically $1,000 to $10,000 in coverage.
Quick Reference: What Coverage Do You Need?
Minimum legal coverage
Liability only (bodily injury + property damage). Required in nearly every state.
Financed or leased vehicle
Full coverage required: liability + collision + comprehensive. Gap insurance strongly recommended.
Older vehicle you own outright
Liability + uninsured motorist. Skip collision and comprehensive if the vehicle is worth under $7,000.