Types of Car Insurance Coverage Every driver need to know in 2024

By Randy Luton | Last Updated: 05/20/2024

Key Insights

  • You might find several car insurance coverages available in different companies.
  • There are 8 major types of car insurance coverage that every driver should know about.
  • These coverages are mandatory in most of the states.
  • Other than these coverages there are several optional coverages that can increase the limit on your car insurance policy.

We all know the significance and necessity of car insurance but which type of car insurance is suitable for us? Most of the drivers stick to the minimum liability coverage to avoid high premiums. Many times we get to know the advantages of a policy when we get into an accident and the expenses are beyond our limits.

To save your time and money, RateForce have created this blog to help you understand the nitty-gritty of car insurance types and its benefits. Keep reading till the end and learn different types of car insurance coverage and which one is suitable for you.

Main 8 Types of Car Insurance Coverage To Know

Let’s start with some popular and necessary types of auto insurance policies:

Liability-Only Coverage

Liability-Only Coverage is the first and foremost important coverage that comes into the picture is the minimum required liability coverage. Every state has its own limit and requirement for minimum liability coverage and drivers have to buy this policy according to the state laws. This is to cover the expenses of damage repair or medical bills of the victim in an accident and not the driver.

Who needs liability-only coverage?

Every driver in every state of the country has to buy liability-only coverage before driving or parking any vehicle on state’s property.

Collision Coverage

Collision insurance coverage type plays an important role when your car collides with another car or object. In such scenarios, your car insurance company will pay for all the expenses of the damage or destruction caused to your car. You will get coverage for the damages caused to your own vehicle only and not the victim even if you are at fault in the accident.

Who needs collision coverage?

This coverage is compulsory for the drivers that have a loan or lease on the car. Moreover; if the vehicle value is high and you can not afford the cost to repair the damages in case of an accident then also this coverage is useful.

Property Damage Liability (PDL)

Property damage liability coverage comes into the picture is for the damages caused to the property of the victim. Your insurance company will bear all the expenses to repair the personal or private property of the victim. This will include the garden, gate, fence, bench, vehicle or any other personal property of the victim. It is important to note that this coverage is for the damages caused to the victim’s property and not for your personal property.

Who needs PDL coverage?

This coverage is for new drivers or families that have teen drivers; drivers in this category are considered risky. The chances of getting into an accident and damaging the property of another person are high.

Bodily Injury Liability (BIL)

Bodily injury liability cover all the medical expenses for the victim of the accident where you are at fault. It is necessary to note that just like property damage liability; bodily injury liability is also not applicable to the driver.

Who needs BIL coverage?

The medical bills can get more than $100,000 in some cases and this much amount is not affordable by everyone else. Hence; if you can afford the medical bills of another person then you can avoid this coverage otherwise this is required for every driver.

Comprehensive Coverage

Comprehensive coverage is another type of car insurance for the case other than collision. There are natural and manmade calamities where our vehicles get damaged like storms, fires, vandalism, etc. In comprehensive coverage; your insurance company will cover the expenses to repair your vehicle. It will also include collision with animals which is not included in collision insurance.

Who needs comprehensive coverage?

Drivers who live in areas that are prone to natural disasters should consider this coverage. Also; drivers that live near forests or wild animals-prone areas should also have comprehensive coverage to avoid paying for car repair from their own pockets.

Uninsured/Underinsured Motorist Coverage

Uninsured/Underinsured motorist coverage is specifically for our own protection. If you ever get hit by a driver who does not have insurance or the limits of his/her insurance are very less then you will have to pay for your expenses. With Uninsured/Underinsured Motorist Coverage; your insurance company will come into the picture in such cases and bear all the expenses.

Who needs Uninsured/Underinsured motorist coverage?

There are 20 states in our country where Uninsured/Underinsured Motorist Coverage is mandatory. If you are living in those states then you will have to buy this insurance type. Also if you are avoiding comprehensive and collision insurance then this one will provide you the additional coverage.

Medical Payments Coverage (MedPay)

Bodily Injury Liability is to cover the expenses of the victim. But what about your own medical expenses in an accident? Medical payments coverage or MedPay comes into the picture in such cases. Your insurance company will cover all your medical expenses that are caused in the accident. Moreover; this coverage also pays the deductibles and copays of other insurance policies like PIP and health cover.

Who needs MedPay coverage?

Drivers in New Hampshire and Maine have to buy this insurance as a mandatory requirement. Drivers in other states should consider adding this coverage if they are already using their health coverage in other treatments.

Personal Injury Protection (PIP)

Similar to Medical Payment Coverage; personal injury protection is for the driver and passengers that got injured during an accident. Unlike MedPay and health insurance coverage, personal injury protection will also cover extra costs like child care, funeral, and lost income. Hence you will get the benefits of MedPay plus extra coverage.

Who needs PIP coverage?

There are 13 states in our country where Personal Injury Protection (PIP) is mandatory. So if you are living in those states then you will have to buy this coverage. Also, for senior citizens and single parents health cover will already be playing a major role so adding PIP will provide extra protection.

Other Optional Types of Car Insurance Coverage Explained

Now that we have seen and explained the most common auto insurance coverage that we all should have or at least know about. Let’s have a look at some small but important coverage types.

Car Towing Coverage

If your car stops working on a lonely highway and there is no one to help nearby then your car insurance company will send help to you. Car towing insurance policy will cover the cost of towing your car to the nearest service station and the labor cost to repair the car.

Please note that you will have to pay for adding new parts to the car. For example; you will have to pay for the new tire cost and not the labor cost to change the tire.

Car Gap Insurance

Car gap insurance is for the case where you have a loan or lease on your car and it is declared as lost or totaled in an accident. In the general case, your car insurance company will pay you as per the actual cash value of the car. While gap insurance will pay the difference of the actual cash value of the car and the amount that you owe as a loan or lease. This coverage is not mandatory but advised for drivers that have a loan or lease on their vehicle.

Full Glass Coverage

Full glass coverage is for all the glass parts in your vehicles like windshield, headlights, mirrors, and windows. In general insurance coverages, glass objects are not included in the policy hence this coverage comes into the picture.

Please note; this coverage is not available in every state hence it is better to check your state’s law before opting for this coverage.

Personal Umbrella Insurance

Personal umbrella insurance is for extra coverage that you will need in case expenses exceed the limit of your policy. If your policy does not have enough limits to cover your expenses then personal umbrella insurance will cover the gap and you will not have to pay from your pocket.

Rental Car Insurance

Liability coverage is required in the case where you are renting a car for leisure purposes. Every car rental company offers rental car insurance type by the name of collision damage waiver or loss damage waiver. This is to cover the expenses of repairing the rental car in case of collision or break-in. In some cases, the car insurance policies cover rental car insurance so make sure to confirm it with your insurance carrier.

Roadside Assistance Coverage

Roadside assistance coverage; this type of car insurance coverage will cover the expenses to repair your vehicle when you are traveling somewhere. You can combine this coverage with towing insurance to get coverage from all the expenses of getting assistance on the roadside anywhere in the country.

Custom Equipment Coverage

Custom equipment coverage is another car insurance type where you will get coverage to repair or replace the custom equipment or accessories of your car. Any equipment that is not installed by the manufacturer of the car is considered custom equipment and will be covered in this coverage.

OEM Coverage

Original equipment manufacturer insurance is optional coverage that makes it compulsory for repair shops to add only original factory equipment to car at the time of repair after an accident or part failure.

Classic Car Insurance

Classic car insurance type is for the owners of classic, antique, collectible, or vintage cars. Cars that are a minimum of 25 years old, exotic cars, or replica cars like bat mobile are considered classic cars. The parts of these cars are not easily available hence they require different coverage.

Rental Car Reimbursement Coverage

Rental car reimbursement coverage is for the situation where your car is in repair after an accident and you need to hire a rental car for everyday usage. This coverage plays an important role until your car is ready for use again and you are renting a car. Your insurance company will pay for the cost to rent a car.

cta car insurance quotes image
Find Cheap Auto Insurance Quotes In Your Area

Usage-Based Insurance (UBI)

In usage-based insurance, the cost of the policy depends on the data of the driver collected from the vehicle. The driver’s vehicle collects the data of the vehicle and the insurer then analyzes the data to decide the cost of the policy premium. In this coverage type, the cost can change every year as per the usage.

Car Insurance for Travel to Mexico

U.S Driver’s license is valid in Mexico but most US car insurance is not valid in Mexico. As a result, drivers are required to buy this separate policy other than the general car insurance. This insurance covers; physical damage, theft, bodily injury, medical payments, roadside assistance as well as loan and lease payoff.

rating star

We generated 12,100,000+ Quotes (...counting), Helping People to Save Money and Time.

Over To You!

These were the major types of car insurance coverage that every driver should know to make a cost effective decision. Car insurance is expensive and buying the wrong coverage or incomplete coverage can also lead to loss of money.

Before buying any auto policy make sure to understand which policy will be beneficial for you and which will help you in the long run. If you still have any doubts then RateForce have a team of experts available for your assistance. Get in touch with us today!

Editorial Guidelines: The above is meant as general information to help you understand the different aspects of auto insurance. This information does not refer to any specific auto insurance policy. Coverages and other features vary between insurers, vary by state, and are not available in all states. References to costs of coverages/repair, average or typical premiums, amounts of losses, deductibles, etc., are indicative and may not apply to your situation. We encourage you to speak to our insurance representative and to read your policy contract to fully understand your coverages.

Was this article helpful?

Randy Luton is the Founder and CEO of RateForce. He is passionate about InsurTech services and has in-depth knowledge about the auto insurance sector of the USA.