You need Auto Insurance to drive your car legally, but there are several types of coverage you can choose that provide additional protection. Understand these seven common types as you decide on coverage that meets your needs and budget.
1. Liability
If you're at fault for an accident, liability coverage pays for property repairs, medical treatment and other related expenses for the other party. Many states require minimum liability limits, but buying higher limits can help protect your savings after a serious crash — see Auto Liability Insurance for more on how liability works.
2. Uninsured Motorist
If another driver causes an accident and lacks insurance or has inadequate coverage, uninsured motorist coverage can pay to repair your vehicle and cover medical costs that the other driver can't pay.
3. Medical or Personal Injury
Medical payments (or personal injury protection in some states) cover medical bills for you and your passengers after an accident. This can be useful if your health insurance has high deductibles or limited auto-related coverage.
4. Collision
Collision insurance pays to repair or replace your vehicle after an accident, regardless of who is at fault. Many drivers drop collision on older cars to save premiums, but it’s generally recommended for new or expensive vehicles.
5. Comprehensive
Comprehensive coverage handles damage that isn't caused by a collision, such as theft, vandalism, fire, storms or animal strikes. Installing tracking or anti-theft devices can sometimes lower comprehensive premiums.
6. Gap
Gap insurance is helpful when you have an outstanding loan or lease and your car is totaled. It can cover the difference between what your insurer pays and what you still owe, so you aren't left paying off a vehicle you no longer have.
7. No-Fault
Some states offer no-fault insurance systems where your own policy pays for your injuries regardless of who caused the crash. No-fault can speed up claims but may come with higher premiums and limits on lawsuits.
Decide which coverages fit your situation by reviewing your vehicle's value, loan status, health insurance and risk tolerance. If you want help choosing limits or bundling coverages, talk to your agent and make sure you're adequately protected.
Frequently Asked Questions
What is the difference between collision and comprehensive?
Collision covers damage from crashes with other vehicles or objects; comprehensive covers non-collision events like theft, weather, or animal strikes.
Do I need uninsured motorist coverage?
Uninsured motorist protection is recommended in areas with many uninsured drivers, since it can cover repairs and medical costs when the at-fault driver lacks adequate coverage.
When is gap insurance worth buying?
Gap coverage is useful if you lease or finance a new car and owe more than the vehicle’s current value, protecting you if the car is totaled.