Auto insurance is required in most states, yet many drivers are unsure what their policy actually covers. Understanding the basics of auto insurance coverage can help you make informed decisions and avoid surprises after an accident.
While coverage varies by policy and state, most auto insurance policies are built from several core components.
Liability Coverage
Liability coverage pays for injuries or property damage you cause to others in an accident. This coverage is required by law in most states.
It typically includes:
- Bodily injury liability (medical costs and legal expenses)
- Property damage liability (damage to another vehicle or property)
Liability coverage does not pay for damage to your own vehicle.
Collision Coverage
Collision coverage helps pay for repairs to your vehicle after an accident, regardless of who was at fault.
This coverage is often required if you have a loan or lease on your vehicle.
Comprehensive Coverage
Comprehensive coverage pays for damage to your car caused by events other than collisions.
Common covered events include:
- Theft or vandalism
- Fire
- Hail or storm damage
- Falling objects
- Animal collisions
Medical Payments or Personal Injury Protection
Medical payments coverage or personal injury protection (PIP) helps pay for medical expenses after an accident, regardless of fault.
Availability and requirements for this coverage vary by state.
Uninsured and Underinsured Motorist Coverage
This coverage protects you if you are hit by a driver who has no insurance or not enough insurance to cover the damages.
It can help pay for medical expenses, lost wages, and other costs depending on the policy.
Optional Coverage Add-Ons
Many auto insurance policies offer optional coverage, such as:
- Roadside assistance
- Rental car reimbursement
- Gap insurance for newer vehicles
These add-ons may be useful in certain situations but are not required for every driver.
What Auto Insurance Does Not Cover
Auto insurance generally does not cover:
- Normal wear and tear
- Mechanical breakdowns
- Intentional damage
- Using a personal vehicle for excluded commercial purposes
Final Thoughts
Auto insurance coverage is designed to protect against unexpected events, not routine expenses. Understanding what each coverage type does helps drivers choose policies that match their needs and driving habits.