May 13, 2019 12:00 PM PT

Types of Auto Insurance

Read more about Car Insurance

There's no such thing as one-size-fits-all car insurance. What kind of coverages do you need—and which one can you skip? Learn more in our guide.

An auto insurance policy is made up of different parts, each covering a specific type of situation that may arise. These could include:

  • Accidents
  • Thefts
  • Other types of incidents

Most types of coverage can be split into three categories: those that pay other people when something happens, those that pay you, and those that cover your vehicle.

Only one type of car insurance coverage is legally required by 48 states (more about that below). All other common coverages are either optional or only required in certain circumstances.

Coverages That Pay Other People

The following coverages protect other people in accidents or other car-related mishaps.

Bodily Injury/Property Damage

Bodily injury and property damage liability coverage (BI/PD) is paid to people who you've injured or whose property you've damaged with your car. However, it only applies to situations in which you've been found to be responsible.

Basically, this is money paid to other people from the insurance company on your behalf. Your policy will only pay up to the limits that you purchased.

Each state (except New Hampshire and Virginia) legally requires every driver to carry a minimum amount of this coverage. Minimum limits vary with each state, but most states require something close to $25,000/$50,000/$25,000.

BI/PD liability limits come in two options: split limits (the cheapest and most common) or combined single limits, aka CSL.

CSL coverage is broader than split limits. All 48 states set their minimum limits in terms of split limits.

Split Limits
The three numbers represent different categories of liability coverage, like 25/50/25

  1. Bodily Injury per Person $25,000
  2. Bodily Injury per Accident $50,000
  3. Property Damage $25,000

The difference between the first two numbers is in accidents where there are multiple passengers in the car, or even multiple cars in one accident. In other words, the policy states, We'll pay up to $25,000 per person in the car but only up to a maximum of $50,000 for the whole accident.

Whatever your liability limits, your policy will ONLY pay up to the numbers shown. Any damages above your limits must be paid by you to them out-of-pocket. This is why carrying enough coverage is so important.

Here's an Example:
Let's say you have 100/300/50 and cause a wreck in a vehicle with 3 passengers. If they have $75,000 each in medical expenses, your policy would fully pay for these.

The $75,000 is less than the $100,000 BI per person limit. And the $225,000 ($75,000 x 3) in total damages is below the $300,000 BI per accident limit.

BUT if each person had $200,000 in medical bills each ($600,000 total), you'd need to cover $300,000 on your own.

Combined Single Limits
The other type of liability coverage is combined single limits, or CSL. This offers one lump sum for accidents. You can apply the limits to whatever is needed, whether that be per person, per accident, or property damage.

CSL is usually more expensive than split limits, simply because it is broader coverage. The typical CSL limits available are usually $100,000, $300,000, or $500,000.

Expect to pay between 10% and 20% more; the exact amount will vary depending on many other rating factors.

These coverages protect you and your passengers in the case of an accident.

Medical Payments/PIP

Medical Payments and Personal Injury Protection (PIP) pay for most medical expenses to you or anyone riding in your vehicle.

This coverage isn't meant to be a replacement for health insurance. Most companies will start the coverage options at either $500 or $1000. They will then offer increments of $1,000 with the maximum coverage amount being $5,000 or $10,000 (some companies offer $10,000 or even $25,000).

PIP is a broader coverage than Medical Payments, as it includes things such as:

  • Physical and occupational therapy
  • Psychiatric care
  • Lost wages
  • Other elements not covered by Medical Payments

You can expect to pay anywhere from $5 to $40 per vehicle for medical payments for up to $5,000 in coverage.

PIP isn't offered in every state. But 15 states actually require it, in addition to the bodily injury/property damage liability requirement.

Your Medical Payments rate is tied to your other rating factors, such as location, driving history, credit score, type of vehicle, etc. If you're already paying a lot for car insurance, expect to also pay a lot for Medical Payments.

Uninsured/Underinsured Motorist Coverage

UM/UIM provides money that goes to you if the person who is responsible for your damages either:

  1. Has no insurance OR

  2. Doesn't have enough insurance to pay for the extent of the damages.

In other words, this coverage is like buying insurance on behalf of an at-fault driver who doesn't have any insurance or doesn't have enough. You can only buy limits up to your own bodily injury liability amount.

Let's say that your liability coverage is $100,000/$300,000 and you have purchased uninsured/underinsured motorist for the same limits.

Another driver runs a red light and T-bones your car. Their limits are at the state minimum, which in this case is $25,000/$50,000.

Your medical bills are $100,000. The other person is at fault, but they don't have enough insurance to fully cover your expenses.

Their policy will still pay out what they have, which is $25,000. The other $75,000 will come from your own policy's UIM coverage. In other words, your insurance company will pay the $75,000, and then will likely try to get their money back through legal means against the at-fault driver.

This coverage is usually the cheapest part of any auto insurance policy, no matter what your liability limits are. You can expect to pay between $5 and $20 per vehicle.

Uninsured Motorist Property Damage

This is similar to Uninsured/Underinsured motorist coverage, but instead provides coverage for your own vehicle.

If somebody hits your car and does not have auto insurance to pay for the damages, your policy could pay for it through uninsured motorists property damage. The main benefit of this coverage is that normally it comes without a low (or no) deductible.

If an uninsured driver hits you, you could just file it under your Collision coverage. However, most people have a $500 or a $1,000 deductible. UMPD is usually offered with either a $0 deductible or a $250 deductible.

This coverage is also useful after hit-and-run accidents. The only pushback you might receive from your insurance company is actually proving that it was a hit-and-run. Be sure to fully document what happened, take pictures of the accident, and obtain a police report for it.

UMPD comes in different coverage amounts, but usually starts at $15,000 or $25,000 and could go as high as $100,000. Select the amount that covers the full value of your car.

Expect to pay anywhere from $10 to $50 per vehicle. The difference between a $0 deductible and a $250 deductible is normally not very much, but this could be one area to save a few bucks.

Coverages on Your Vehicle

Two different types of coverages protect your vehicle in the case of an accident or other incident: Comprehensive and Collision. But they cover your vehicle in different ways.

Comprehensive

Comprehensive coverage is sometimes called Other Than Collision, or OTC. It covers damages to your car as a result of almost any type of situation except a collision with a solid object.

Common examples of Comprehensive losses are:

  • Fire
  • Theft
  • Hail
  • Falling objects
  • Hitting an animal

It has to be sudden and accidental incident—wear and tear is not covered by Comprehensive coverage.

This coverage is almost always cheaper than Collision because most Comp losses are cheaper to fix than Collision losses.

You can usually buy Comprehensive coverage without Collision. This allows people to still protect their vehicle from many things while saving the money that would've gone to Collision coverage.

Comprehensive coverage carries a deductible. This is the amount that the insurance company deducts from your claims check.

Some companies allow you to carry a $0 Comp deductible, but the most common deductible amounts are $250, $500, and $1,000.

Collision

Collision coverage applies to damages to your vehicle if you:

  • Get into an accident with another vehicle
  • Hit a solid object, such as a building or telephone pole
  • Damage your car by hitting a pothole

The only type of "collision" that actually doesn't fall under this coverage is hitting an animal. Running into any type of animal falls under Comprehensive coverage.

Collision is optional, except if you have a loan or lease on your car. In that case, the car isn't technically yours (at least yet), and the financing company will want to protect their investment by requiring full coverage.

Collision claims are more frequent and usually more expensive than Comprehensive claims, which is why Collision coverage is usually the most expensive part of an auto policy.

This coverage kicks in if you are at fault for an accident or if you live in a no-fault state. If you weren't at fault, then the other person's Property Damage liability would pay for your damages.

If you have a vehicle worth more than $5,000, then it probably makes sense to carry Collision coverage.

The cost of collision coverage varies widely depending on many rating factors, such as your age, location, driving history, type of car, credit score, etc.

Some drivers will pay just a couple hundred dollars a year, while others could pay over $1,000/year.

Deductibles usually have the same options as Comprehensive deductibles. You don't need to have the same deductible for each, and many people choose to have higher Collision deductibles than they do for Comprehensive.

Additional Coverages

These few additional coverages are either optional or automatically included in your policy. Some companies offer them a la carte, while others offer a package endorsement that applies to all vehicles.

Roadside Assistance
This is one of the most popular additional coverages available through most insurance companies. The company will give you a 24/7 emergency number to call. A contracted service company will come and provide any number of roadside services, free of charge (up to a certain limit).

The typical benefits include:

  • Up to 1 hour of onsite labor (not including parts).

  • Battery jumpstarts, flat tire changes, and lockout assistance.

  • Emergency fuel (cost of fuel not included).

  • Towing services, usually within a certain mileage radius (normally 15-20 miles), to a repair facility.

  • Concierge help in providing for alternate transportation, lodging, etc.

Roadside assistance coverage is usually available on a per vehicle basis and is normally only available to vehicles with full coverage. You can expect to pay anywhere from $8/vehicle up to $30/vehicle for this service.

Towing and Labor
Unlike roadside assistance, the company does not provide a number to call, nor do they have a contract with a particular roadside service company. Instead, towing and labor coverage reimburses you for the roadside assistance expenses.

The coverage limits for this usually start at $25 and could go as high as $150 or more.

Expect to pay anywhere from $2/vehicle to $20/vehicle. It's usually less expensive than roadside assistance costs.

Rental Car Reimbursement
This provides reimbursement money if you need to rent a car due to a covered loss. This might mean:

  • You have damage to your car that will take time to fix OR
  • Your car is totaled and you're waiting to get a new one

This coverage does NOT mean that your insurance company will pay for a rental car while you're on vacation. Your normal vehicle needs to be either undrivable or in the shop for a covered loss before this coverage kicks in.

Rental car reimbursement is broken into two limits: a daily and total. The lowest amount is usually $20/day and $600 total, which will appear on your quote or policy as $20/$600. This means that the insurance company will reimburse you for a maximum of $20 each day, and no more than $600 in total.

Other coverage amounts are usually $30/$900, $40/$1200, and $50/$1500.

The cost of rental car reimbursement is usually between $15 and $40 per vehicle.

Full Safety Glass
Some companies call this coverage by a different name, but the word glass is usually in there somewhere. Full safety glass coverage erases your deductible for any type of glass claim.

Normally, glass claims fall under comprehensive coverage. This means that if you have a cracked or broken windshield to cost, you'll need to pay the deductible. If your windshield costs $1,200 to fix, but you have a $1,000 deductible, you likely won't be filing the claim just to get $200.

With safety glass coverage, you just turn in the claim and the company will pay for the entire $1,200.

Not all insurance companies offer this option, but it can be particularly appealing to people who carry high deductibles.

Similar to other Additional Coverages, some companies include this endorsement in a package deal. If you can buy it separately, expect to pay between $10 and $20 per vehicle.

Ridesharing
There is a common coverage gap for people who drive for Lyft and Uber. Your personal auto policy provides coverage during "off" hours or just everyday use. The company provides insurance coverage for when there is a passenger in your vehicle and you are driving them to their destination.

But the TNC doesn't cover you while you are in transit to pick them up, and your regular insurance company won't pay for claims while you are using your vehicle "for hire."

Some insurance companies offer a ridesharing endorsement that covers this gap. It basically extends your regular coverage to that gray area when you've accepted a passenger but haven't picked them up yet.

The cost of this endorsement varies, but you can expect to pay around $15/month for it.

Personal Contents
Loose personal items are almost never automatically included in an auto policy. Personal contents are covered under most homeowners policies, no matter where you're at within the United States or Canada.

This means that if you're in a wreck and have a computer, expensive makeup, nice clothes, or even your smartphone in your car, and those are all damaged, you could turn the claim into your homeowners policy.

The problem with filing a homeowners claim is:

  1. You probably have at least a $1,000 deductible on your policy that would apply.
  2. You've filed two claims, instead of one. This could increase both your homeowners AND your auto policies increase.

Some companies offer coverages for personal contents, either through a package endorsement or by itself. Typically, the amount of coverage is either $500 or $1,000.

Extra Coverages
Some insurance companies provide a whole host of extra coverages, many of which will never be used.

The exact coverages and limits vary with each company. Common extra coverages include:

  • Airbag replacement coverage (up to $2,500).

  • Locksmith services (up to $500).

  • GAP coverage (covers the difference between the market value of your car and the loan you have on it).

  • Death benefits (up to $5,000).

  • Customized equipment (up to $1,000).

  • Customized electronic equipment (up to $1,000).

If these coverages are available, they are usually lumped into one endorsement or come automatically with the policy.

Bottom Line

Auto insurance policies contain different parts that cover many types of situations. If you opt for more extras, you will pay more for car insurance. But you'll also be better protected.

When shopping for a new policy, consider some of the "extra" coverages. If it fits within your budget, it can be a big relief to buy something like Roadside Assistance if your car breaks down in the middle of a weekend road trip.

More from CreditDonkey:


Why is My Car Insurance So High


Average Cost of Car Insurance


Metromile Review

More Articles in Money Tips

Car Insurance

Best Car Insurance for College Students

Car insurance is expensive, especially for young drivers. But you can find ways to save. Here are some of the best insurance companies for college students.

Leave a comment about Types of Auto Insurance?

Name
Email (won't be published)


May
22
2019

Hotwire

Hotwire is the best site for discounts on hotels, flights, and car rentals. Read this to learn how to save money on your next trip.
More Articles in Money Tips








About CreditDonkey®
CreditDonkey is a credit card comparison website. We publish data-driven analysis to help you save money & make savvy decisions.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed on this page are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

†Advertiser Disclosure: Many of the card offers that appear on this site are from companies from which CreditDonkey receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). CreditDonkey does not include all companies or all offers that may be available in the marketplace.

*See the card issuer's online application for details about terms and conditions. Reasonable efforts are made to maintain accurate information. However, all information is presented without warranty. When you click on the "Apply Now" button you can review the terms and conditions on the card issuer's website.

CreditDonkey does not know your individual circumstances and provides information for general educational purposes only. CreditDonkey is not a substitute for, and should not be used as, professional legal, credit or financial advice. You should consult your own professional advisors for such advice.