Auto Insurance Coverage Options [Choose and Save]

What are the required auto insurance policy options? What is recommended for car insurance coverage? What is optional coverage for auto insurance? With so many auto insurance coverage options, it's important to understand each and every type of auto insurance coverage to get your money's worth. Most drivers get full coverage which includes liability, collision, and comprehensive in addition to some other optional (but important) coverage.

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Melanie Musson

Published Insurance Expert

Melanie Musson is the fourth generation in her family to work in the insurance industry. She grew up with insurance talk as part of her everyday conversation and has studied to gain an in-depth knowledge of state-specific car insurance laws and dynamics as well as a broad understanding of how insurance fits into every person’s life, from budgets to coverage levels. She also specializes in sustai...

Published Insurance Expert

Laura D. Adams

Insurance & Finance Analyst

Laura Adams is one of the nation’s leading finance, insurance, and small business authorities. As an award-winning author, spokesperson, and host of the top-rated Money Girl podcast since 2008, millions of readers and listeners benefit from her practical advice. Her mission is to empower consumers to live healthy and rich lives by planning for the future and making smart money decisions. She rec...

Insurance & Finance Analyst

UPDATED: Feb 14, 2024

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It would be nice if car insurance coverage options were spelled out line by line when gathering and comparing auto insurance quotes online, but life isn’t always that easy.

Some of the common questions consumers have fall into three basic groups: What are the required auto insurance policy options? What is recommended for car insurance coverage? and what is optional coverage for auto insurance?

The truth is, everyone has their own opinion about auto insurance coverage recommendations, and that often depends on their state laws but also personal experience and advice from others. This is why it’s so important to come to an unbiased source for car insurance coverage explained so you can ultimately figure out how much car insurance you need.

Keep reading to learn more about the best auto insurance coverage options. When you’re ready to get free quotes, use our online quote tool to save.

Car Insurance Coverage Types

Auto insurance coverage is generally divided into two different categories: bodily injury and property damage. The former covers any injuries sustained by you or anyone else involved in an accident (along with medical costs stemming from those injuries). It may also pay out legal fees or, in severe cases, funeral costs which can be directly attributed to the accident.

Bodily Injury Coverage

Type of Coverage What It Pays For
Bodily Injury Damages/injuries sustained in an accident that you cause (or someone driving your vehicle causes)
Personal Injury Protection (PIP) Injuries, medical costs, and lost wages you sustain as the result of an accident (regardless of fault)
Underinsured Motorist Damages/expenses which the culpable driver’s insurance policy cannot sufficiently cover; also covers car, pedestrian, bicycle, and hit-and-run accidents
Uninsured Motorist (Bodily Injury) Identical to Underinsured Motorist, but only applies if the culpable driver has no insurance coverage. Sometimes sold separately from Underinsured Motorist coverage

Property Damage Coverage

The second category, Property Damage, insures your vehicle against physical damage which results from an accident. Property Damage coverage comes in the form of:

Type of Coverage What It Pays For
Collision Coverage Physical damage to your vehicle from colliding with another vehicle or object. Requires a deductible payment before your insurance pays out your claim
Comprehensive Coverage Pays out claims for damage sustained from theft, vandalism, or Acts of God (fire, weather damage, etc)
Gap Insurance If your car is totaled in an accident, Gap Insurance pays the difference between the Fair Market Value of your vehicle and the remaining balance on your car loan
Property Damage Liability Pays for vehicle repairs, property damage repairs, and legal expenses when you (or someone driving your vehicle) are found at fault in an accident
Uninsured Motorist (Property) Pays for repairs to damage sustained by your vehicle from an uninsured driver. Can be a cost-effective alternative to paying a high Collision deductible

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Note: your auto insurance policy covers Property Damage and Bodily Injury for you and your vehicle. But when someone else drives your vehicle and gets into an accident, your policy only covers Property Damage – unless that person is also on your car insurance policy. For someone who borrows your vehicle but is not on your policy, their automotive insurance policy (and the vehicle insurance policy of the at-fault driver) will be responsible for covering their Bodily Injury expenses.

For added liability coverage (in the event you are found at-fault in a truly devastating accident) you can purchase an Umbrella Policy. These policies provide extra amounts of coverage when the limits of your Liability Coverage have been exhausted.

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