The Complete Guide to the Most Common Types of Auto Insurance
There are six common types of auto insurance coverage, including liability, uninsured and underinsured motorist, comprehensive, collision, medical payments, and personal injury protection. When combined, these types of car insurance provide enough coverage to reimburse expenses associated with a wide range of personal injuries and damages related to an auto accident.
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UPDATED: Apr 19, 2022
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- The six most common types of car insurance include liability, uninsured/underinsured motorist, comprehensive, collision, medical payments, and personal injury protection
- There are several other car insurance coverage types available, but they vary depending on the insurance company
- The best way to assess what kind of insurance you need is to carefully examine your financial situation if you were to get into a serious accident
Knowing the most common types of auto insurance is helpful not just for shopping for a policy but for understanding the different ways you can adjust your coverage. In this way, you can minimize your liability if you get into an accident.
You may also find a few ways to save some money by opting out of coverage that you don’t need. Read on to make sure you’re informed about your car insurance options.
The Six Main Types of Auto Insurance
The six main types of car insurance include liability, uninsured or underinsured motorist, comprehensive, collision, medical payments, and personal injury protection. Here’s a breakdown of what each involves.
Liability is the coverage you get to protect you from financial liability if you cause an accident and the other person’s vehicle gets damaged or they get injured. That’s why you may see liability separated into these two categories — property and bodily injury. This is mandatory coverage, for both veterans and those who haven’t served, and it’s required in almost every state in the country.
Uninsured/Underinsured Motorist Coverage
Uninsured/underinsured motorist coverage helps take care of your financial obligations if you get into an accident with someone, and they’re at fault but either don’t have insurance or don’t have enough to cover the expenses associated with the incident.
This kind of coverage is required by law in some states but is a good idea in any place where people tend to have less insurance or none at all, or where there are low legal minimum requirements. If you live in a state with many underinsured or uninsured drivers, you may want to consider getting this coverage.
Comprehensive coverage for veterans helps cover the costs of damages your vehicle suffers when you’re in an accident that isn’t caused by a collision. For example, comprehensive coverage may help you pay for damage resulting from:
- Hail or other natural disasters
- Hitting an animal
This kind of coverage typically isn’t mandatory unless you lease or finance a vehicle.
Collision coverage for those who’ve served in the military helps cover the cost of repairing your vehicle if it collides with another vehicle and you’re at fault. It can also apply to accidents where you hit an object, such as a building, guardrail, or telephone pole. Typically, you’re only required to have collision coverage if you’re leasing or financing your vehicle. If you own the car outright, it’s optional.
Medical payment coverage covers the costs of medical treatment for you and your passengers if you get in a car accident. It doesn’t matter whether you were at fault. Medical payment coverage is optional in most states but is required in some states, usually those with no-fault insurance laws. It’s best to double-check with your insurance agent to see what’s covered and how much coverage you should get.
Personal Injury Protection
Personal injury protection (PIP) for veterans is similar to medical payment insurance in that it covers medical expenses regardless of whether you’re at fault. However, personal injury can also help take care of wages lost due to not being able to work while recovering from an injury. In some areas, PIP is mandatory, and in others, it’s merely one of your car insurance options.
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What other types of auto insurance coverage are there?
Some other types of auto insurance coverage include GAP and travel insurance. GAP insurance pays for the remainder of an auto payment if your car gets totaled. Travel insurance is designed to cover people who take their vehicles to other countries. It covers you in the event you’re in a country, such as Mexico, that doesn’t accept U.S. auto insurance. You can purchase it as you enter the country.
Which type of coverage should I select when purchasing auto insurance?
The car insurance types you should select depend on where you live and the conditions under which you travel. First, you will want to find out which types of insurance coverage are mandatory and purchase those.
Your next step should be to assess how much you can afford to pay in the event of an accident. For example, if your car suffers significant structural damage, would you be able to pay out of pocket? Otherwise, you may want to look into collision and comprehensive coverage.
Consider where you live, too. If you live in an area where there are many underinsured or uninsured drivers, you should opt to get that coverage. Also, you may want to get personal injury protection to ensure you and your passengers are covered if you have to miss work because of an accident, especially if you don’t work from home.
Helpful Tips for Picking the Right Type of Car Insurance for Your Situation
When picking car insurance, consider the following tips before committing to an insurance quote:
- Use online resources to get information about different insurance companies.
- Get quotes online from multiple types of car insurance companies.
- Research each insurance company you’re considering.
- Read reviews of other customers to get a sense of the company’s reputation.
While the six most common types of car insurance are all worth considering, others can be a good fit, depending on your situation. Take your time to research the best insurance policy and company, giving careful thought to the kind of coverage you’ll need to protect you financially and help you bounce back quickly after an accident.