Understanding Your Options: Your Guide to the Different Types of Car Insurance


About 13% of drivers in the U.S. are uninsured. If you operate a vehicle without insurance, your state may choose to suspend your license. Being uninsured also means you’ll have to pay out of pocket for expenses that result from an accident.

The safe option is to rely on car insurance. There’s just one problem: There are so many different types of car insurance. It can be hard to figure out which policies you need and which are worth the price.

Before you purchase any car insurance policies, take this time to educate yourself. You could save tens of thousands of dollars if the worst occurs, so long as you have the right coverage.

Let’s take a look at some of the most common types of car insurance.


1. Liability Coverage

Vehicle liability coverage is an essential type of car insurance. In fact, most states require liability coverage by law.

When you’re at fault for an accident, your liability coverage will compensate a victim for his medical expenses and property damages.

The more you pay, the more your insurance will cover in case of an accident. If you don’t know your state’s insurance requirements, you can find that information on your state’s government website.

Before you choose a car insurance plan, be sure to find the best insurance company. Detailed reviews can help you narrow down your search.

2. Collision Coverage

Since your vehicle is one of the most expensive assets you own, it’s important to keep it covered. No matter who is at fault, collision insurance covers the cost of repairing your vehicle. Your insurance company might opt to write off a heavily-damaged vehicle and send you a check, should they decide it’s irreparable.

If you’re still making car payments, it’s likely your loan holder requires collision coverage.

Otherwise, remember that you don’t legally need collision coverage. However, it provides peace of mind and financial protection. If you cause an accident, or you’re in an accident with someone who doesn’t have liability coverage, you’ll have to handle the repair cost on your own.

3. Comprehensive Coverage

To further protect your vehicle, consider comprehensive coverage. In general, comprehensive insurance will cover damage that occurs to your vehicle when it’s not in use. It’s an excellent choice to protect yourself against severe weather, thieves, and vandalism.

Imagine this: You walk out into the parking lot and discover your vehicle’s windshield is cracked. Once you pay a small deductible, the insurance company will handle the rest.

Most insurers bundle comprehensive and collision coverage together. When paired with liability coverage, this trio is known as full coverage car insurance. That said, there are additional types of auto insurance coverage.

4. Uninsured Motorist Coverage

Many states demand uninsured motorist coverage. So what is it? When you’re the victim of an accident and the other driver isn’t insured, this insurance will cover your medical and property expenses.

Normally, uninsured motorist coverage also comes with underinsured coverage. Underinsured motorist coverage will kick in if the driver is insured, but his insurance policy can’t cover the full extent of the expenses.

The required minimum coverage is quite low in some states. In others, insurance coverage isn’t necessary. Even in states with mandatory liability coverage, some drivers may be driving without it.

5. Rental Reimbursement

Let’s say your vehicle has been in a nasty accident. Although your insurance company is covering the claim and cost of repairs, you have no means of transportation until it’s in working order. How do you plan on getting to work?

You might be able to get by with the help of friends, family, or public transportation. But odds are, it’d be a hassle.

With rental reimbursement coverage, you don’t have to worry about your car being in the shop. You can rent a vehicle and your insurance company will handle the cost. The insurance coverage has a daily limit, but it should be more than enough to get you a suitable means of transportation.

6. Emergency Roadside Assistance

If you’ve ever had a flat tire or locked your keys in the car, you know how difficult it can be to get on the road again. That’s where emergency roadside assistance can help. Basically, you’ve got options if you ever find yourself stranded.

Emergency roadside assistance will replace a flat tire, get you gas, a jumpstart — and a few other forms of support. It’s a great lifeline when you often take road trips or have an old car that’s liable to break down.

7. Personal Injury Protection

Some states require personal injury protection and others simply have it as an option. Personal injury protection covers medical expenses, regardless of who is at fault. It tends to be more flexible than traditional liability coverage.

Personal injury protection is different than traditional auto insurance. There’s no need to argue over who is at fault of the accident. Instead, your insurance company will cover you, no matter what.

Types of Car Insurance: Have Your Pick

Accidents happen. Statistics say you’ll experience a car accident at least once every two decades. That’s why it’s important to protect yourself with the right car insurance coverage.

With so many types of car insurance, it can be a hassle to figure out which are right for you. But after reading this guide, you may know what kind of coverage you’d like.

Before you delve deep into the search, start by looking at reviews to find the best car insurance company. Your insurance coverage won’t matter if your company denies your claims.

Keep reading our blog for more automotive tips.

Author: Brandon Park