What are the different types of car insurance?

The five main types of car insurance explained

The five main types of auto insurance are liability, collision, comprehensive, uninsured/underinsured motorist and personal injury protection or medical payments coverage. Liability covers injuries and damage to others. Collision and comprehensive protect your car. UM/UIM protects you from certain losses caused by drivers without insurance or low limits. PIP and MedPay help cover injuries in no-fault states. Your state and lender determine which coverages you must carry.

If there is a loan or lease, the three types of car insurance at the top of the list below are required for a full coverage policy.

Coverage	What it pays for	Is it required?
Liability	Injuries and property damage you cause to others	Required in most states
Collision	Damage to your car from a collision	Not required by state law, but lenders require it
Comprehensive	Damage to your car from non-collision events	Not required by state law, but lenders require it
Uninsured/underinsured motorist	Covered losses caused by an uninsured or underinsured driver	Required in some states
PIP or MedPay	Medical expenses and other covered injury-related costs	Required in no-fault states

Read our methodology

Liability insurance

Liability insurance pays for injuries and property damage you cause to others in an accident. It is required in most states and includes bodily injury and property damage liability. Your liability limits determine how much your insurer will pay, so choosing only the legal minimum can leave you with significant financial exposure.

What does it cover?

If you cause an accident, liability insurance covers the other driver’s vehicle repairs and medical expenses. It also protects you in a lawsuit if the other driver sues you for their losses.

Who should buy it?

Every driver should have personal liability insurance. Plus, it’s a legal requirement in every state except New Hampshire.

Other factors to consider

If your state requires car insurance, you must purchase a minimum amount of liability coverage to register your vehicle and legally drive. However, the minimum amount of coverage may not be adequate.

It’s a good idea to raise your liability coverage limits for more protection. Otherwise, you risk paying out-of-pocket in a lawsuit.

How much does liability insurance cost?

The nationwide average cost for state minimum liability coverage is $618, but your rate will be higher if you purchase more coverage and will differ by state.

Comprehensive and collision insurance

Comprehensive and collision insurance cover damage to your own car, and lenders require both for financed or leased vehicles. Collision pays for damage from a crash or other collision. Comprehensive pays for damage from events such as theft, fire, hail and animal strikes.

What do they cover?

Collision pays for your car’s repairs after an accident, and comprehensive pays for the damage to your car from a non-collision incident, like fire, theft, vandalism or hail. Both policies have a deductible that comes out of your insurance payout.

Who should buy them?

You should purchase collision and comprehensive insurance if you have a loan on or lease your vehicle. Most lenders will require you to have it. It’s also highly recommended for anyone who can’t afford to pay for vehicle repairs or replacement out of pocket.

Other factors to consider

Comprehensive and collision coverage are often sold together, but you may be able to buy them separately. You can also choose different deductibles for each coverage, depending on your insurer and policy.

How much do comprehensive and collision insurance cost?

The average annual cost for collision insurance is $1,009, and $426 for comprehensive insurance, according to Insurance.com data. Choosing a higher deductible may save you money, but it should never exceed an amount you can afford.

Uninsured/underinsured motorist insurance

Uninsured/underinsured motorist coverage helps pay for covered losses when another driver causes an accident but has no insurance or not enough insurance. Uninsured motorist coverage applies to drivers without insurance. Underinsured motorist coverage applies when the at-fault driver has insurance, but the limits are not enough to cover your losses. Some states require one or both.

What does it cover?

Uninsured/underinsured motorist coverage (UM/UIM) pays for your vehicle repairs and your medical expenses if you get into an accident with a driver who doesn’t have car insurance or doesn’t have enough car insurance to cover your losses in full.

Who should buy it?

Some states require one or both coverages, so it’s not always optional. States that require some form of UM/UIM are CT, IL, KS, MA, MD, ME, MN, MO, NC, ND, NE, NH, NY, OR, SC, SD, VA, VT, WI, WV, and D.C. If your state doesn’t require uninsured or underinsured motorist coverage, it can provide additional peace of mind, especially if you don’t have a full coverage policy.

Other factors to consider

Your uninsured/underinsured motorist bodily injury limits cannot exceed your liability limits. If you do not have health insurance, consider matching your uninsured/underinsured motorist bodily injury limits to your liability coverage. If you do not have collision coverage, consider adding uninsured motorist property damage coverage.

How much does uninsured/underinsured motorist insurance cost?

On average, uninsured/underinsured motorist coverage costs $199 a year.

Personal injury protection and medical payments insurance

Personal injury protection (PIP) and medical payments coverage (MedPay) help pay medical expenses for you and your passengers after an accident, regardless of fault. PIP is also called no-fault insurance and can cover medical bills, lost wages and other related expenses. MedPay focuses on medical and funeral expenses.

What does it cover?

Personal injury protection (PIP) and medical payments insurance (MedPay) pay for the cost of treating injuries that you, authorized drivers or your passengers suffer in a car accident, regardless of fault.

Who should buy it?

Personal injury protection is required in these states: DE, FL, HI, MI, MA, KS, MN, NY, UT, OR, ND, and NJ. Most are no-fault states, which means each driver’s insurance company pays for their injuries, no matter who causes the accident.

Other factors to consider

If personal injury protection or medical payments coverage is optional in your state and you already have health insurance, we recommend buying enough to cover your deductible. If you do not have health insurance, we strongly recommend you buy at least $10,000 in personal injury protection or $5,000 in medical payments coverage.

How much do personal injury protection and medical payments insurance cost?

The average cost of personal injury protection is $191 per year, while medical payments coverage averages $20 per year.

Other types of car insurance coverage

Additional car insurance coverages can help with specific costs that liability, collision, and comprehensive do not cover. Rental reimbursement helps cover the cost of a temporary vehicle after a covered loss. Roadside assistance helps with towing and other roadside services. Gap insurance helps pay the difference between your car's value and what you owe on a loan or lease after a total loss.

Here are several car insurance coverage types to consider for extra protection:

Rental reimbursement. Rental reimbursement insurance will cover the cost of a rental car while your car is being repaired for a covered claim. Some insurance companies include this coverage as part of a standard policy. The cost of rental car reimbursement depends on your insurance company and the amount of coverage you choose.
Emergency roadside assistance/towing and labor. Emergency roadside assistance, also called towing and labor coverage, will get your car back on the road if it breaks down. It typically covers fuel delivery, jumping a dead battery, flat tire changes, extrication, and towing (up to a certain mileage). Roadside assistance can cost as little as $5 per month. Pricier plans tend to offer more (and better) coverage.
Mechanical breakdown insurance. Mechanical breakdown insurance will pay for certain vehicle repairs, even if it’s not part of a claim. It typically covers mechanical issues related to the transmission, engine, fuel system, brakes, air conditioning and power system. The cost of mechanical breakdown insurance varies based on the insurance company. Expect it to cost from $30 to $100 a year.
Gap insurance. If you lease or finance your vehicle, gap insurance pays off your remaining loan balance if your car is totaled and you owe more than it is worth. You can buy gap insurance (or loan-lease payoff coverage) through your lender. It’s also available through standalone gap providers and many insurance companies. Gap insurance is about $41 per year. It's typically cheapest to buy through your current insurance company if it’s offered.
New car replacement insurance. New car replacement insurance is an endorsement that will pay to replace your vehicle with a similar new one if your car gets totaled without regard for depreciation. The price of new car replacement insurance depends on your insurance company and your vehicle's make, model, and year.

Other types of car insurance policies

Some drivers need a different type of auto insurance policy rather than extra coverage. Non-owner insurance is for people who drive but do not own a car. Pay-per-mile insurance bases your rates on your actual mileage. Classic car insurance is designed for collector vehicles and uses an agreed value instead of actual cash value.

Depending on your needs, you might want to consider these other types of car insurance policies.

Umbrella insurance. An umbrella insurance policy gives you extended personal liability coverage to help pay for legal expenses if you cause an accident and get sued by the other driver. The cost of umbrella insurance depends on your coverage limit. For example, if you have $1 million in coverage, the average premium is between $150-$300. On the other hand, a $5 million policy will run you between $375-$525.
Pay-as-you-go/pay-per-mile insurance. Pay-as-you-go insurance or pay-per-mile insurance is a type of usage-based car insurance that you pay for based on miles traveled on top of a low flat rate. It is best suited for drivers who drive less than 10,000 miles per year.
Non-owner insurance. Non-owner car insurance is a way to get car insurance if you don’t own a vehicle. It’s also required for drivers who don’t have a car but need to purchase liability insurance to keep their driver’s license. The average cost of a non-owner policy is $407 per year.
Classic car insurance. Classic car insurance is designed to cover classic and collector cars. It covers the car’s agreed-upon value rather than the actual cash value, which includes depreciation. According to Hagerty, one of the leading classic car insurance providers, the average cost of classic car insurance is roughly 34% cheaper than regular insurance.

What type of car insurance do you need?

You need the coverage required by your state and by your lender. Beyond that, choose coverage based on your car's value, your financial situation and the risks you want to protect against. State minimums can leave you with little protection for your own car or medical expenses, so compare the cost of broader coverage before you decide.

We recommend that drivers carry more than the state minimum for liability coverage because it's rarely enough, even with some states increasing the legal minimum requirements. Even a moderately serious accident will likely exceed state minimum limits, leaving you with mounting bills and possibly even a lawsuit.

It's best to carry as much car insurance coverage as you can afford. Reducing or dropping coverage you need to save money isn't a good idea; there are better ways to find a lower car insurance rate. However, you can drop car insurance you really don't need. If you have more than one vehicle or access to public transportation, you likely don't need rental car reimbursement. If your car is paid off and low-value, you can consider dropping comprehensive and collision coverage.

People ask

Is buying more than the minimum required coverage necessary?

By law, you only need to buy the minimum, and you only need to buy comprehensive and collision coverage if you have a loan. So, from the standpoint of legal requirements, additional coverage isn't necessary. However, minimum coverage may leave you with major financial exposure in an accident.

Choosing car insurance coverage: Our expert tips

Carry all of the car insurance you're required to by law and by the terms of your loan or lease agreement.
State minimum requirements do not provide enough liability coverage for even a moderately serious accident, and provide no coverage for your car.
If your car insurance is too expensive, shop around to find an insurer that offers more affordable rates. Dropping or reducing your coverage can leave you with expensive bills if you're in an accident.

Methodology

National and state average rates are based on three coverage levels: state minimum, 50/100/50 liability-only, and full coverage with 100/300/100 liability and $500 deductibles.

Unless otherwise indicated, averages are based on our full coverage data set. This data set is based on:

Bodily injury liability of $100,000 per person and $300,000 per incident
Property damage liability of $100,000 per incident
Comprehensive and collision deductibles of $500
40-year-old driver
Honda Accord LX
Good credit
A clean driving record
12-mile commute, 10,000 annual mileage

Additional rate data is drawn based on:

All available year, make and model data
Ages ranging from 16 to 75
Excellent, fair and poor credit
All available traffic violations
One or more at-fault accidents

Our rate data is fielded by Quadrant Information Services, encompassing data from 34,588 ZIP codes in all 50 states and Washington, D.C. and gathered from 220+ insurance companies.

FAQ: Types of car insurance

How do I know what type of car insurance I need?

You need the coverage required by your state and by your lender. Beyond that, your needs depend on your car's value, your financial situation and the risks you want to protect against. Compare quotes with the same limits and deductibles to find the right balance of coverage and cost.

What is liability-only insurance?

Liability-only insurance is a policy that includes only bodily injury and property damage liability insurance, which apply if you hit another driver. Liability-only insurance doesn’t offer any coverage for your vehicle or your medical expenses after an accident.

Should I adjust my coverage when adding a teen driver?

Adding a teen driver is a good time to review your coverage limits and compare quotes. Teen drivers can cost more to insure because insurers consider age and driving risk when setting rates. Check your policy and ask your insurer about available discounts. Data show that drivers between the ages of 16 and 19 are more likely to get into an accident than any other age group.