What Are the Different Types of Car Insurance?

Quick Answer

Car insurance can protect you from the costs arising from an unexpected accident, theft or damage to your vehicle. Here are the different types of car insurance to consider when choosing your policy.

A young couple admiring a new car

The road can be a risky place for drivers, with everything from potholes to speeding motorists putting both you and your car in peril. Fortunately, auto insurance can help protect you when the unexpected happens by covering the financial cost of injuries and damage to property or vehicles.

A standard auto insurance policy typically includes several layers of coverage, such as liability, collision, comprehensive, uninsured/underinsured motorist and medical payments/personal injury protection insurance. There are also specialized insurance options that can provide extra protection. Comparing options and getting quotes from several insurers can help you choose what you need. Here are key types of auto insurance to know about.

1. Liability Insurance

Liability insurance helps pay the other party's costs if you're at fault in an accident. Bodily injury liability coverage pays medical costs for injuries you cause; property damage liability insurance pays for damage you cause to another person's property. Typically, liability insurance covers things like hospital and car repair bills, lost wages and legal fees if someone sues you. In most states, a certain amount of liability coverage is required by law.

2. Medical Coverage or Personal Injury Protection

Medical payments or personal injury protection (PIP) coverage pays to treat injuries to you and anyone else in your car after an accident. In some cases, this insurance may also cover lost wages, funeral expenses and other costs related to the accident.

3. Collision Insurance

Collision insurance covers damage to your car if you collide with another vehicle, an animal or an object (such as a telephone pole), or if you hit a pothole. If your car is leased or financed, the lender or lessor will generally require you to buy enough collision coverage to protect the vehicle until your vehicle is paid for (or until your lease is up).

4. Comprehensive Insurance

Comprehensive insurance covers any damage to your car not caused by a collision, such as theft, fire, tornado or vandalism. It also covers repairing or replacing a cracked or broken windshield. As with collision insurance, lessors or lenders usually require purchasing a certain amount of comprehensive insurance.

5. Uninsured and Underinsured Motorist Coverage

Uninsured and underinsured motorist insurance pays for your bodily injury and property damage if a driver without insurance (or without enough insurance) causes an accident. In some cases, it may also cover lost wages, medical costs and other expenses for you and your passengers. Uninsured and underinsured motorist coverage is mandatory in some states. However, even if your state doesn't require it, purchasing this insurance can help pay unexpected expenses if you're involved in an accident with a driver who is uninsured.

Other Types of Car Insurance

Several other types of auto insurance may be worth considering, even if they're not required by law or by your vehicle's lessor or financing company.

  • Gap coverage: When a leased or financed car is totaled, insurance pays out the car's value, which may be less than you owe the lender or lessor. Gap insurance (also called guaranteed asset protection) covers the extra amount for you.
  • Rideshare coverage: Designed for rideshare service drivers, this insurance protects you during the period where you're logged in to the rideshare app but haven't yet accepted a trip request.
  • Rental car reimbursement: This coverage reimburses or pays you to rent a car when yours is in the shop for covered repairs.
  • Roadside assistance: If you don't already have roadside assistance coverage through a provider such as AAA, you can add it to your car insurance policy.
  • Glass or windshield insurance: Insurance deductibles for repairing or replacing a windshield can add up unless you also have glass or windshield insurance, which covers glass repair or replacement with low or no deductible.
  • Mexico car insurance: If you plan to drive in Mexico, you'll need specialized auto insurance, available from U.S. insurers who sell it through Mexican partner companies.
  • Classic car insurance: Cover the cost of replacing or repairing a collector, antique, modified or luxury car with this insurance, which covers your prized vehicle for its full value and pays for specialized repairs.
  • Equipment insurance: This comes in two forms, original equipment manufacturer (OEM) insurance, which pays for factory-original parts in repairs or replacements, and customized equipment insurance, which covers repairs or replacement of aftermarket customizations such as oversized wheels.
  • New-car replacement coverage: Because a new car's value drops about 20% in the first year of ownership, replacing a new car that's totaled can cost more than your insurance payout. New-car replacement coverage pays to replace a vehicle with a new one of the same make and model if the car is totaled within a certain number of years or miles.

The Bottom Line

Having the right auto insurance coverage can make a big difference when you're involved in an accident. To select the best policy for you, get auto insurance quotes online, which you can do with Experian, or via an independent insurance agent who sells coverage from a variety of insurance companies.

Before you start comparison shopping, check your credit report and credit score. In many states, insurance carriers look at your credit-based insurance score to determine your risk level and help price your insurance premiums. Credit-based insurance scores are compiled using similar data as regular credit scores, so taking time to improve your credit score might help you qualify for lower premiums.