When it comes to car insurance, there are a variety of coverage options available. Understanding the different types of coverage and how they can help protect you is essential when you're looking for a new policy or reviewing the one you already have. The six most common types of auto insurance are auto liability coverage, coverage for uninsured or underinsured drivers, comprehensive coverage, collision coverage, medical payments, and personal injury protection. Liability coverage is almost always mandatory and includes bodily injury and property damage.
Depending on your state's minimum requirements, you may also have to carry protection against personal injury and an uninsured driver. Personal vehicle coverage is optional (unless you're financing or leasing). Personal Injury Protection (PIP) pays for your medical expenses, lost wages and funerals, as well as your legal fees if you are taken to court. It serves as a substitute for personal injury liability insurance that the other driver did not have.
This coverage is also limited to the amount of insurance you take out. Uninsured or Underinsured Motorists (UM/UIM) pays for your medical expenses, lost wages and funerals, as well as your legal fees if you are taken to court. Comprehensive coverage pays for damage to your vehicle caused by events other than a collision, such as theft, vandalism, fire, hail, flooding, and animal strikes. It also covers damage caused by hitting an object such as a fence or tree.
Collision coverage pays for damage to your vehicle caused by an accident, regardless of who was at fault. If you use your car to take trips or deliver food through services such as Uber and Uber Eats, you've basically converted your personal car into a business car. Even if you're not required to have collision or comprehensive insurance, they're usually a good investment since they protect you from paying out of pocket for expensive vehicle repairs. Medical payments cover medical expenses for yourself and any passengers in your car if they are injured in an accident.
This coverage is usually limited to a certain amount per person and per accident. Personal Injury Protection (PIP) pays for medical expenses, lost wages and funerals, as well as your legal fees if you are taken to court. Every state has minimum insurance requirements; however, most states require much less insurance than you need to protect yourself and your assets. If you're a new or inexperienced driver, have a new car, a luxury car, or an expensive vehicle, you may want comprehensive and collision coverage to reduce financial risk.
If you and your passengers don't have health insurance, you should consider a higher limit or maximize your coverage.