Kinds of Car Insurance Coverage
Since car insurance coverages can function differently between tort states and no-fault states, it’s important to discuss specifics with a licensed insurance agent or an insurance company.
Liability insurance
Liability coverage pays for costs associated with an accident for which you’re found legally at fault. Liability insurance generally includes two types of coverage:
- Bodily injury: This covers the expenses related to injuries or death for others (e.g., another driver, their passengers, or a pedestrian) when you are at fault.
- Property damage: This covers the expenses for repair or replacement of others’ property (e.g., fencing, a home, etc.) you damage when operating your vehicle.
Most states require drivers to carry a minimum amount of liability coverage before they can register and operate a vehicle in that state. You can find out how much liability coverage you need by visiting your state’s Department of Motor Vehicles (DMV)
Uninsured motorist coverage
Uninsured motorist (UM) coverage provides financial protection if you are hurt in an accident and the other driver doesn’t have car insurance. Depending on where you live, this coverage may extend to cover property damage. Uninsured motorist coverage also pays if you are the victim of a hit-and-run. Your state may require you to carry a minimum amount of uninsured motorist coverage. You may also want to consider underinsured motorist (UIM) coverage, which typically pays the difference between your expenses and the policy limit of the at-fault driver when their limits are insufficient. However, in some states, underinsured motorist coverage is not applicable unless your underinsured motorist limits are greater than the liability limits of the other driver.
Personal injury protection (PIP)
This no-fault insurance coverage pays the medical expenses for you or your passengers if you are injured in an accident, regardless of who is at fault. Personal injury protection (PIP) may also apply if you’re riding a bike or walking and are hit by a vehicle.
In some cases, PIP coverage may reimburse you for lost wages and expenses for tasks you can’t perform while recovering, such as house cleaning.
PIP is required in some states and is optional in some others. As always, check with your state’s DMV to determine if PIP is available in your state and if you are required to carry it.
Medical payments coverage (MedPay)
Like personal injury protection, medical payments (MedPay) coverage pays the medical bills for you and your passengers for injuries sustained in a car accident, regardless of who is at fault. However, unlike PIP coverage, MedPay does not cover any additional or related expenses, like lost wages.
MedPay is required in some states and optional in others. It is not available in all states.
Collision coverage
Collision coverage pays for repairs if your car is damaged during a car accident or if it collides with another object like a building or tree, even if you’re at fault. It may also cover damage from potholes.
Comprehensive coverage
Comprehensive coverage, or other than collision coverage, pays for damage to your car that occurs during an event that’s not a car accident or collision with another object. Examples of covered losses include fire damage, hail damage, damage from falling objects, a cracked or shattered windshield, vandalism, or damage from an animal. It also reimburses you if your car is stolen.