Car insurance standard coverage
Understanding the standard coverage types will help you identify coverages that are special or unique.
Liability insurance
Liability insurance is the baseline for all car insurance policies, as every state has minimum liability requirements that policies must meet. Liability auto insurance pays others when you’re responsible for a car accident, including bills for their injuries and property damage. It also covers your legal costs if you’re sued over an accident.
Collision coverage
If you hit another vehicle or an object, collision insurance pays for repairs to your own vehicle. If it’s totaled, collision coverage will pay the actual cash value of your vehicle, or what it’s worth at the time of the accident—not what you paid for it. If you make a collision claim, your insurance payment will be reduced by the amount of your deductible.
If you don’t want to pay out-of-pocket for your vehicle’s repairs, you’ll want collision insurance. It can cover damage you caused to your vehicle by backing into a pole, rear-ending someone and other collisions. If you have a car loan or lease, your lender or lessor will require it.
Comprehensive coverage
Comprehensive coverage pays for your vehicle repairs after non-collision-related damage, such as damage caused by floods, fires or hail. It pays out the actual cash value of your vehicle if it’s totaled or stolen.
Like collision coverage, if you have a car loan or lease, you’re probably required to have it under the terms of the contract. This coverage also has a deductible if you make a claim.
Personal injury protection
In no-fault insurance states, personal injury protection (PIP) is used to reduce lawsuits over minor injuries. If you or your passengers are injured in a crash, regardless of who caused it, you make a claim on your own PIP for injuries, lost wages due to injuries, rehabilitation and other expenses.
If your injuries are severe, you make a claim against the at-fault driver’s liability insurance.
Uninsured/underinsured motorist coverage
If you’re injured by a driver who doesn’t have insurance, you can make a claim on your uninsured motorist (UM) coverage. In some states, you can buy UM coverage that extends to property damage (called UMPD) and covers repairs to your vehicle.
Similarly, underinsured motorist coverage fills in the gap if you’re hit by a driver who has some liability insurance but not enough to cover your accident bills.
Car insurance costs
All states have systems for approving the car insurance rates filed by insurance companies, but those approvals don’t guarantee competitive rates from every insurer. We always see a significant cost disparity in our rate analyses.
Cost comparisons among the best car insurance companies
A comparison of average rate increases due to common issues, like accidents and speeding tickets, reveals the wide range of differences among the top-rated car insurance companies in our analysis. If your driving record has changed or you’ve made claims, shopping around can reveal whether you’re overpaying for auto insurance.
Average annual cost for a good driver
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