Types of Car Insurance: What Each Coverage Type Covers

Car insurance in the United States comes in six core types: liability, collision, comprehensive, uninsured/underinsured motorist, medical payments (MedPay), and personal injury protection (PIP). Every state requires liability. Collision and comprehensive are required if your car is financed or leased. The rest are optional in most states but can save you from big out-of-pocket costs after an accident.

 Cost data sourced from our analysis of more than 1.5 million quotes from major U.S. insurers across all 50 states and Washington, D.C. Annual figures reflect average U.S. driver profiles and will vary based on state, vehicle and driving history. Read our full methodology to learn more.

At $25 to $100 a year, MedPay costs less than a typical ER copay and covers your full health insurance deductible after a single accident. It's also the least expensive coverage type on this list.

Customize your policy with optional add-on coverage like roadside assistance (for breakdowns), gap insurance (for financed vehicles) and rental reimbursement (while your car's in the shop). Non-standard policy types cover less common needs, such as classic cars, rideshare driving and pay-per-mile plans.

Liability insurance pays for injuries and property damage you cause to other people in an accident. It does not cover your own vehicle or your own medical bills. It covers only the costs you owe to others.

Two types make up liability coverage:

• Bodily injury liability pays for others' medical expenses when you're at fault.
• Property damage liability pays for damage to another person's property when you're at fault. The at-fault driver always covers property damage regardless of state fault laws. The last number in the limit split represents the per-accident limit.

Liability-only policies cost $300 to $600 per year for most drivers. How much you pay for liability car insurance depends on your state, driving record and coverage limits.

Do you need liability coverage? Yes. Every state except New Hampshire requires a minimum amount for liability coverage, usually something like $25,000 per person and $50,000 per accident for injuries plus $25,000 for property damage. Skip it and you risk fines or a suspended license. Lenders require it on any financed or leased car too.

Some states also let you pick between full and limited tort, which affects your right to sue. In tort states, the at-fault driver's bodily injury coverage pays the medical bills. In no-fault states, you use your own personal injury protection first. MoneyGeek's full vs. limited tort guide covers how the choice works in each state.

Collision coverage pays to repair or replace your car after an accident, whether you hit another vehicle, a guardrail, or a stationary object, and it applies no matter who was at fault. It covers your car only, not the other driver's. Collision payouts are based on actual cash value (ACV), so your car's market value at the time of the crash after depreciation, not what you paid for it. If repairs cost more than that value, the insurer declares a total loss and pays the value instead. On a car worth less than $5,000 that you could replace out of pocket, dropping collision saves $400 to $800 a year.

Do you need collision coverage? Lenders and leasing companies require collision and comprehensive until the loan or lease is paid off. It's also worth carrying if you live somewhere with high theft rates or severe weather. Check your declarations page to know if your policy has full coverage.

Comprehensive car insurance pays for damage to your car from causes other than a collision, including theft, vandalism, fire, hail, flooding, falling objects and animal strikes. Lenders and leasing companies require comprehensive coverage, just as they require collision. Comprehensive also has a deductible you select when you buy the policy.

Comprehensive coverage costs less than collision because claims are less frequent. In high-theft or severe-weather areas, keep comprehensive coverage even on older vehicles.

This type of insurance doesn't cover mechanical breakdowns, normal wear and tear or personal belongings stolen from your car.

Do you need comprehensive coverage? Comprehensive coverage is required by lenders if you finance or lease your vehicle and recommended if you live in high-theft or severe-weather areas.

Uninsured motorist coverage (UM/UIM) pays your medical bills, lost wages and related expenses when an at-fault driver has no liability insurance. Underinsured motorist (UIM) coverage applies when the at-fault driver has insurance but the policy limits are too low to cover your total costs. According to the Insurance Information Institute, about 14% of drivers nationwide are uninsured.

Most states that require UM/UIM coverage set minimums that mirror their liability minimums. Some states require it. Others make it optional. UM/UIM is one of the least expensive coverages you can add, averaging $100 to $300 per year, per MoneyGeek's analysis of rates from major insurers.

Do you need it UM/UIM coverage? UM is required in 22 states, but recommended everywhere. About 1 in 8 drivers on the road carry no insurance at all, and in some states, more than 20% are underinsured. UM/UIM is one of the cheapest coverages you can add.

Medical payments coverage (MedPay) pays medical expenses for you and your passengers regardless of fault, up to your coverage limit. No deductible applies.

Do you need it MedPay coverage? MedPay is required in Maine and New Hampshire. You're only required to have MedPay in New Hampshire if you buy insurance there. Car insurance is optional in the state. We recommend MedPay if you lack health insurance or have very high health insurance deductibles.

Personal injury protection (PIP) is broader coverage than MedPay. PIP pays medical expenses plus lost wages from injuries up to your coverage limit. No deductible applies, and fault doesn't matter.

Do you need it personal injury protection (PIP)? In no-fault states, PIP is usually required by law and replaces your right to sue for minor injuries. In states where it's optional, PIP is worth adding if you want more injury protection than MedPay offers, especially if you need coverage for lost wages.

Most drivers need at least liability coverage as it's legally required in 49 states. Whether to add collision and comprehensive depends on your vehicle's value and how you financed it.

• If your car is financed or leased: Your lender requires collision and comprehensive in addition to liability. Full coverage isn't optional.
• If you own your car outright: Liability is the only legal requirement, but collision and comprehensive are worth keeping if your car's value exceeds what you can afford to replace out of pocket.
• If your car is worth less than $5,000: Consider dropping collision and comprehensive and keeping liability only. The annual premium cost can exceed the payout on a low-value vehicle.

One useful benchmark to determine the right type of car insurance: if your annual collision and comprehensive premium exceeds 10% of your car's current market value, dropping them is worth considering. For most drivers with a car worth over $10,000, a solid starting policy is 100/300/100 liability, collision with a $500 deductible, comprehensive and UM/UIM. That combination runs $1,000 to $2,000 a year for most U.S. drivers, per MoneyGeek's analysis.

Uninsured motorist coverage and MedPay or PIP round out a solid policy for most drivers. Both are inexpensive relative to the protection they provide.

State minimums like 25/50/25 are often too low for a serious accident. Cause a crash with $80,000 in medical bills on a $50,000 bodily injury limit, and you owe the $30,000 difference yourself. Advisors and licensed agents recommend matching your liability limits to your net worth.

Switching from 25/50/25 to 100/300/100 costs $150 to $300 more a year for most drivers, and that same $80,000 crash gets paid in full. If you have real assets to protect, an umbrella policy adds $1 million or more on top of your car insurance limits for another $150 to $300 a year.

Costs vary by state, driving record, and vehicle, but here's the range for each coverage per year:

• Liability: $300 to $600 at minimum limits, more for higher ones
• Collision: $400 to $800
• Comprehensive: $200 to $400
• Uninsured motorist: $100 to $300
• PIP: $50 to $200, depending on the state
• MedPay: $25 to $100
• Rental reimbursement: $30 to $50
• Roadside assistance: $10 to $30

Liability usually makes up 50% to 60% of your total premium, collision another 20% to 30%, and comprehensive 10% to 15%. Optional coverages like MedPay and PIP account for 1% to 5%. Full coverage, which combines liability, collision, and comprehensive, runs $1,000 to $2,000 a year for most drivers. These are national figures, and your state's rules shape what you actually pay, since some states require PIP and others don't.

To see what full coverage costs in your state, use our car insurance calculator. For a broader breakdown, see our guide to the average cost of car insurance.

You can expand a standard policy with optional add-ons, sometimes called riders, which cover things like custom parts and equipment. They typically raise your premium by 5% to 15%.

Some drivers need coverage outside a standard personal auto policy. The table below lists specialty policy types and the drivers each one serves.

Car insurance endorsements let you customize your policy with add-ons or changes to standard terms.

Car insurance is a contract between you and your insurer. You pay a premium monthly or semi-annually, and the insurer covers specific losses up to your limits. Policies usually run six or twelve months and renew automatically, with a notice around 30 days out so you can adjust coverage first. Your insurer can also decline to renew under certain conditions.

When you buy a policy, you choose:

• Coverage types, like liability, collision, and comprehensive
• Coverage limits, or how much your insurer will pay
• Deductibles, or what you pay before coverage kicks in
• Which drivers and vehicles are covered

When you file a claim, you report the incident, your insurer investigates, and then it settles: applying your deductible and paying the rest of the covered amount. There are deadlines for reporting a loss, so file promptly. Coverage applies only to what your policy names, and exclusions and per-claim and per-accident limits both apply. You can manage everything online or through your insurer's app.