The Complete Guide to Car Insurance Coverage Types in 2025
Excellent
Been here before? Get your quotes back.
)
)
Written byAnna Baluch
)
Anna Baluch is a Cleveland-based personal finance and insurance expert who’s written for Compare.com since 2023. With an MBA from Roosevelt University, she enjoys writing educational content that helps people make smart financial decisions.
Her work can be seen across the web in several notable publications, including Freedom Debt Relief, Credit Karma, RateGenius, and The Balance.
)
Edited byMatthew Gross
)
Matthew Gross is an editor at Compare.com. With a background in editing and SEO, he’s passionate about creating content that helps readers get the information they need to make more informed decisions. Prior to Compare.com, Matthew brought his user-centered approach to his work with global brands like Apple and Adobe.
Matthew graduated from Illinois State University, where he earned his bachelor’s degree in Journalism.
Updated
Why You Can Trust Compare.com: At Compare.com, it’s our mission to find simple ways to help our customers save money on the things they need. While we partner with some of the companies and brands we talk about in our articles, all of our content is written and reviewed by our independent editorial team and never influenced by our partnerships. Learn about how we make money, review our editorial standards, and reference our data methodology to learn more about why you can trust Compare.com.
Advertiser Disclosure
At Compare.com, it’s our mission to give you the tools to find the best (and most affordable) insurance for your unique needs and budget. We strive to provide information that’s helpful, clear, and unbiased, and we believe that comparing insurance companies should never put you at risk of spam. Our editorial team — which is made up of experienced writers, editors, insurance agents, and data analysts — has spent thousands of hours researching and creating the coverage overviews, side-by-side comparisons, and detailed reviews you see across our site.
While we make money through partnerships with some of the brands we discuss in our articles, our editorial team operates 100% independently, and these partners never influence or affect the topics, reviews, ratings, or recommendations we provide. We never guarantee favorable reviews or mentions in exchange for compensation from any brands or partners, and we uphold strict editorial standards to ensure our content is always independent, truthful, and unbiased.
In This Article
Car insurance policies aren’t created equal. A variety of coverage types protect against different risks, from uninsured drivers to roadside assistance. While most states require a minimum amount of insurance, other coverages are optional.
By understanding your options, you can pick the right protection for your budget, needs, and personal preferences.
Let’s take a closer look at the various types of car insurance coverage you can choose from.
Required vs. Optional Car Insurance Coverage
Most states require some amount of auto insurance coverage. But each state has its own specific criteria. So drivers in New York have to meet different car insurance requirements than drivers in Ohio.
In addition to state-required auto policies, you can invest in additional coverage for greater protection behind the wheel. Most insurers offer a range of optional coverages, from gap insurance to rental car coverage.
Let’s explore the six main types of car insurance coverage in more detail.
Compare Car Insurance Coverage
Get quotes from 100+ top insurers and find the right coverage for you.
Secure. Free. Easy-to-use.
Based on 1395+ reviews
4.7/5
The 6 Main Types of Car Insurance Coverage
)
When shopping for insurance, you’ll usually come across these six core auto insurance coverages.
Liability coverage
Unless you live in New Hampshire, you must buy liability coverage to legally drive. Liability insurance consists of bodily injury liability and property damage liability coverage. Bodily injury liability coverage helps pay for injuries you cause to others in an accident. Property damage liability covers physical damage you cause to someone’s car or other property.
Liability coverage limits typically include three numbers, which correspond to each coverage. So if your limits are 25/50/25, your car insurance company will pay out the following maximums in a covered claim:
$25,000 per person for bodily injuries
$50,000 per accident for bodily injuries
$25,000 per accident for property damage
Tl;dr
What it covers: Bodily injuries and property damage to the other party after you cause an accident
When you need it: With the exception of New Hampshire, every state requires drivers to have liability insurance
Collision coverage
Collision insurance is a part of full-coverage car insurance and covers you after you hit another vehicle or object, like a tree or telephone pole, regardless of fault. Your lender usually requires you to have collision coverage if you finance or lease your car.[1]
If you have a luxury car or can’t afford high out-of-pocket repair costs, you should consider collision insurance. You’ll still need to pay a deductible if you file a claim, which is the amount you’re responsible for paying before your insurance covers the rest.
Tl;dr
What it covers: Colliding with another car or object
When you need it: If you finance or lease your car, have little driving experience, can’t afford out-of-pocket repair costs, or own a high-value vehicle
Comprehensive coverage
Comprehensive coverage is another part of a full-coverage policy that covers vehicle damage from non-collision accidents. It pays for damage from things like severe weather, theft, vandalism, falling objects, broken windshields, and more.
You can think of it as the catch-all part of your car insurance policy. Just like collision coverage, your lender likely requires you to have comprehensive coverage if you finance or lease your car.
Tl;dr
What it covers: Non-collision accidents
When you need it: If you lease or finance your vehicle, have a high-value car, or live in an area with frequent natural disasters
Uninsured/underinsured motorist coverage
Uninsured/underinsured motorist (UM/UIM) insurance covers accidents with at-fault drivers who don’t have enough car insurance or lack coverage altogether.[2] [3] It may also apply to other situations, like hit-and-runs or when the other driver’s insurer goes out of business.
Similar to liability coverage, UM/UIM insurance covers both bodily injury and property damage. But in this case, it’s for your injuries and damage. Even if your state doesn’t require it, UM/UIM coverage is typically a smart investment. Without it, you might have to pay out of pocket after an accident with an underinsured or uninsured at-fault driver.
Tl;dr
What it covers: Accidents with uninsured or underinsured drivers who are at fault
When you need it: After an accident with an uninsured or underinsured driver, a hit-and-run, or if the other driver’s insurer goes out of business
Personal injury protection (PIP)
Personal injury protection (PIP) insurance helps pay for your and your passengers’ medical bills that your health insurance doesn’t cover after an accident.[4] It can also pay for lost wages and in-home services, like childcare or household help.
If you live in one of these states, you’re legally required to have PIP coverage:[5]
Arkansas
Delaware
Florida
Hawaii
Kansas
Kentucky
Maryland
Massachusetts
Michigan
Minnesota
New Jersey
New York
North Dakota
Oregon
Pennsylvania
Utah
Tl;dr
What it covers: Medical bills, lost wages, and in-home services like childcare
When you need it: If you live in a no-fault state or don’t have good health insurance
Medical payments coverage (MedPay)
Medical payments (MedPay) insurance covers all kinds of medical expenses, like health insurance deductibles, ambulance fees, surgeries, exams, and more. MedPay can reimburse you for medical bills that your regular health insurance policy might not cover.
Unlike PIP, MedPay is only for medical expenses, not lost wages or other services. Only Maine and New Hampshire require drivers to have MedPay coverage.
Tl;dr
What it covers: First-party medical expenses and legal bills, up to your policy limit
When you need it: If you or your passengers need help paying medical bills after an accident
Other Car Insurance Coverage Types
In addition to the coverages listed above, you can opt for more coverage for more protection and peace of mind. Let’s take a look at some other coverage options you might want to consider.
Gap insurance
Gap insurance covers the difference between your vehicle’s value and what you still owe on your car loan.[6] Without gap coverage, you’d have to cover the difference between your insurance payout and loan balance if you total your car or someone steals it. It can be especially important if you put less than 20% down or rolled over negative equity from a previous loan.
But gap insurance isn’t worth it if you buy your car in cash, you make a large down payment, or your outstanding car loan is less than your vehicle’s actual cash value. Most lenders offer gap insurance, but you can also buy it from your car insurance company.
Tl;dr
What it covers: The difference between the value of your car and your remaining loan balance if you total your car or if someone steals it
When you need it: If you lease or finance your car, put less than 20% down, or roll over negative equity from a previous loan
Roadside assistance
If you find yourself in an emergency situation while driving, roadside assistance can be a real lifesaver. Although every policy is different, most cover towing for mechanical breakdowns, battery jump-starts, fuel delivery, tire changes, and lockout assistance. Some insurers offer 24/7 roadside assistance, but you can also get it through a subscription-based auto club, like AAA.
Tl;dr
What it covers: Emergency services like towing, jump-starts, and fuel delivery
When you need it: During emergency situations on the road, like if you get a flat tire or your car battery dies
Rental car coverage
Rental car coverage reimburses you for a rental car while your vehicle is in the repair shop after a covered claim.[7] It may also cover stolen items from a rental car, plus property damage and bodily injuries you cause to others while driving a rental.
You can typically buy rental car coverage through your car insurance company, your credit card company, or the rental car company.
Tl;dr
What it covers: The cost of renting a car while your car is in the repair shop after a covered claim, stolen items from a rental, and at-fault accidents with a rental
When you need it: If your vehicle is in the repair shop after a covered claim, it can help pay for a rental car so you can get around
What “Full Coverage” Really Means
The term “full-coverage” car insurance doesn’t have a set definition. Instead, it varies by insurer and includes a combination of policies, like liability insurance, collision coverage, and comprehensive coverage. In some states, it also includes UM/UIM coverage and PIP.
Despite its name, full-coverage auto insurance doesn’t actually cover everything. That’s why it’s important to understand the specifics of your plan, or you might face surprise costs.
How to Choose the Right Coverage for You
)
Every driver has unique needs from their insurance. Consider the factors below to help you determine the ideal car insurance coverage for your unique situation.
State requirements: You must meet the required minimum insurance limits in your state. Check with your state’s department of motor vehicles (DMV) or department of insurance to find out what you need.
Age and value of your car: If you own an expensive vehicle, you may want more auto insurance coverage. But if you have an older car that isn’t worth much, minimum coverage may suffice.
Your finances: If you can cover higher out-of-pocket repair costs after a car accident, you may need less car insurance than a driver on a tight budget.
How often you drive: The frequency of your driving can play a major role in choosing the right coverage. For example, if you work remotely, liability coverage might be enough. But if you drive frequently for work or personal reasons, you might want additional coverage.
Risk tolerance: Some drivers are more willing than others to take on risk. If you prefer to minimize your risk while driving, full coverage may bring you greater peace of mind.[8]
Find Cheap Car Insurance
Compare multiple quotes and save money in seconds.
Secure. Free. Easy-to-use.
Based on 1395+ reviews
4.7/5
Car Insurance Coverage Types FAQs
Figuring out the right car insurance coverage can be confusing, but we’re here to help. Below, we answered some common questions about auto insurance coverage types.
The three main types of auto policies are liability coverage, collision coverage, and comprehensive coverage. Most states require you to have liability insurance to legally drive. If you finance or lease your car, your lender usually requires you to have collision and comprehensive coverage.
In car insurance, 100/300/100 refers to liability coverage limits of $100,000 per person of bodily injury liability coverage, $300,000 per accident of bodily injury liability coverage, and $100,000 per accident of property damage coverage.
Whether you’re better off with collision or comprehensive insurance depends on your unique situation. Collision coverage helps pay for accidents with vehicles or stationary objects, while comprehensive coverage applies to situations like damage from natural disasters, fire, theft, and vandalism.
If you have an older car or can pay for repairs yourself, you may need only liability coverage. Full coverage is usually a better fit if you want more financial protection, especially if you want to avoid high out-of-pocket expenses after an accident.
The state you live in usually determines the minimum amount of liability coverage you need. You can find this information on your state’s DMV or department of insurance website.
It depends. Uninsured motorist coverage is likely a good idea, even if your state doesn’t require it. It can prevent you from paying hefty out-of-pocket expenses if an uninsured driver hits you. That said, adding uninsured motorist coverage usually increases your insurance premium.
Not usually. If your car is 10 years old, you likely don’t need full-coverage car insurance. Full coverage will probably cost more than your car’s value.[9] Liability insurance may be a smarter investment.
You can drop comprehensive car insurance if your car is worth less than 10 times your premium. Your maximum payout might not be cost-effective, especially after you pay your deductible.
Methodology
Data scientists at Compare.com analyzed more than 50 million real-time auto insurance quotes from more than 75 partner insurers in order to compile the rates and statistics seen in this article. Compare.com’s auto insurance data includes coverage analysis and details on drivers’ vehicles, driving records, insurance histories, and demographic information.
All the rates listed in this article have been collected from a combination of real Compare.com quotes and external insurance rate data gathered in collaboration with Quadrant Information Services. Compare.com uses these observations to provide readers with insights into how auto insurance companies determine their premiums.
Related Articles
)
What Is Liability Car Insurance?
November 27, 2023
)
Collision vs. Comprehensive Explained
January 12, 2024
)
Do You Need Rental Reimbursement Coverage?
February 3, 2021
)
What is Full-Coverage Car Insurance?
January 9, 2024
)
What Is Uninsured Motorist Coverage and Is It Worth It? | Compare
March 7, 2023
)
What Is Bodily Injury Liability Insurance?
November 20, 2023
)
Liability vs. Full-Coverage Car Insurance Explained
June 3, 2024
)
Car Storage Insurance: What to Know
March 1, 2024
Sources
- Georgia Office of the Commissioner of Safety Fire. "Auto."
- Arizona Department of Insurance and Financial Institutions. "Uninsured and Underinsured Motorist Coverage."
- Washington State Office of the Insurance Commissioner. "What to do if you’re hit by an uninsured or underinsured driver."
- Texas Office of Public Insurance Consel. "Understanding PIP vs Med-Pay."
- Experian. "What States Have No-Fault Insurance?."
- Consumer Financial Protection Bureau. "What is Guaranteed Asset Protection (GAP) insurance?."
- Ohio Department of Insurance. "Rental Car Insurance."
- Insurance Information Institute. "8 questions to ask before buying auto insurance."
- Insurance Information Institute. "Nine ways to lower your auto insurance costs."
About Compare.com
Compare.com's #1 goal is to save you money. We publish resources that are based on hard-hitting data and years of industry experience to help you make more informed decisions with your wallet.
- All of Compare.com's content is written and reviewed for accuracy by a team of experienced writers and editors who are experts on the topics they cover.
- None of Compare.com's content is ever influenced by the companies and brands we partner with.
- Compare.com's editorial team operates independently of any of the company's partnership or business development interests. We publish unbiased information strictly for the benefit of our readers.
- All of the content you see on Compare.com is based on comprehensive analysis and all data is gathered and vetted from trustworthy sources.
Learn more about us, our team, and what makes us tick.
)
Anna BaluchInsurance Writer
Anna Baluch is a Cleveland-based personal finance and insurance expert who’s written for Compare.com since 2023. With an MBA from Roosevelt University, she enjoys writing educational content that helps people make smart financial decisions.
Her work can be seen across the web in several notable publications, including Freedom Debt Relief, Credit Karma, RateGenius, and The Balance.
Matthew Gross is an editor at Compare.com. With a background in editing and SEO, he’s passionate about creating content that helps readers get the information they need to make more informed decisions. Prior to Compare.com, Matthew brought his user-centered approach to his work with global brands like Apple and Adobe.
Matthew graduated from Illinois State University, where he earned his bachelor’s degree in Journalism.