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What Makes Up An Auto Insurance Policy

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If you’re shopping for auto insurance or shopping for a new car, you’ll want to understand the different types of car insurance policies. Not all plans are the same, not all car insurance companies are the same either; and that means taking a careful look at the levels of coverage versus costs you can expect.

Here we’ll cover the main types of car insurance options, they include:

  • Auto Liability Coverage
  • Uninsured & Underinsured Motorist Coverage
  • Comprehensive Coverage
  • Collision Coverage
  • Personal Injury Protection
  • Medical Payment Coverage

For differing locations, some of these items are required by law. In some other states, they are optional but still a good idea. Knowing what is and isn’t required in your state will help you determine what level of auto insurance you need.

Auto Liability Coverage

This is mandatory in most states and must be purchased up to the required minimum coverage level (depending on the state). Liability covers two areas:

  • Bodily Injury Liability: help with the costs of another person’s bodily harm or injury if the accident is caused by you.
  • Property Damage Liability: help with the costs of another person’s property due to an accident caused by you.

Uninsured & Underinsured Motorist Coverage

If you’re in an accident with a person who is not insured, uninsured motorist coverage will help pay medical bills and repairs to your vehicle. If you’re in an accident with an underinsured driver and their level of car insurance won’t cover your medical bills, uninsured motorist coverage kicks in and helps with medical bills and repairs.

Some states require uninsured or underinsured liability coverage but in others, it is not required.

Comprehensive Coverage

This area helps cover damages to your car from things like hail, theft, fire, falling debris, vandalism, and more. If your automobile is damaged by an item covered by comprehensive coverage, you’ll get help with repair or replacement costs (up to the vehicle’s cash value). You do pay a deductible (your out of pocket cost) before your insurer pays you back for the covered claim.

This is an optional piece of coverage in most states, so it’s up to you the level of coverage you want to pay for in premiums.

*If your car is financed or leased, the lender may require you to have comprehensive coverage, so be sure to check on that.

Collision Coverage

This type of coverage will help pay for expenses related to a crash with another vehicle or with stationary objects like light poles or mailboxes. Similarly to comprehensive coverage, this will help pay for repairs and replacement of the vehicle if need be.

*If your car is financed or leased, the lender may require you to have collision coverage, so be sure to check on that.

Personal Injury Protection

PIP (personal injury protection) is only available in certain states. Similar to medical payment coverage, PIP helps pay for medical expenses incurred due to an accident. Also, it can help pay for things related to your injuries like child care, lost income, and more.

*This is not required in all states and is typically optional. It is smart in general but especially if you do not have health insurance.

Medical Payment Coverage

If you, your passengers, or family members who drive your insured car are insured following a car accident, medical payment coverage will help with expenses from the injuries received due to the collision. Things like a hospital stay, ER visits, x-rays, surgery, and more; are covered by medical payment coverage.

*This is not required in all states and is typically optional. It is smart in general but especially if you do not have health insurance.

Other Auto Insurance Coverage Options

Above are the main tenants of an auto insurance policy, but you can also choose from additional items to add for more coverage. An insurance agent can help you understand different areas and aspects of add-on coverage, so be sure to ask questions. Additional coverage choices can include:

  • new car replacement coverage
  • rental or transportation reimbursement
  • towing and roadside assistance
  • ride-sharing coverage
  • classic car insurance 
  • sound system protection
  • and more

Knowing what you need and what you want is important as they can be different things.

The more protection you have the better covered you will be, but you’ll also pay more in monthly car insurance premiums. So finding a balance is your best bet.

Where Can I Buy Car Insurance?

There are lots of different places you can find suitable car insurance coverage and it is a good idea to get quotes from a few different companies. To get a quote for free right now in seconds:

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