6 types of car insurance: what's required in 2022 – MarketWatchJuly 7, 2022
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Drivers can typically choose from many types of car insurance, but a few stand out. Below are the six most common types of auto coverage:
While not all policyholders must carry every type of car insurance, each one is at least worth considering. We at the Home Media reviews team have carefully reviewed the best car insurance choices overall, and we’ll explain the significance and usefulness of each kind of coverage.
Liability insurance is used to pay for other people’s medical bills and property damage if you cause a car accident. This type of car insurance is required in every state except for New Hampshire and Virginia, although each location sets its own liability limits for minimum coverage.
There are two main components of liability coverage: bodily injury liability insurance and property damage liability insurance.
The main point to keep in mind with liability insurance is that it won’t cover your damages or injuries if you cause an accident. If someone else is found to be at fault for an accident, either that person’s liability coverage or your PIP will cover damages.
Nearly everyone should have liability insurance, as it’s required in nearly every state. Only drivers in New Hampshire and Virginia can opt out of liability coverage, yet that’s never recommended.
Whether they drive new cars or older vehicles, all motorists should carry liability insurance to legally drive and avoid paying for expensive repairs to other vehicles out of pocket.
Collision insurance covers the repairs to or replacement of your vehicle after an accident. It also takes care of your car after a hit-and-run or if you crash into a tree or a fence. Don’t expect collision coverage to apply to damages from non-crash incidents or medical bills, though.
No state requires that drivers carry collision insurance. The key difference between this optional coverage and the mandatory liability insurance is that collision insurance applies to your car rather than other impacted vehicles.
It’s smart for all drivers who can afford collision coverage to carry this type of car insurance. Repair costs are often expensive after car accidents, and collision insurance makes it possible for many drivers to meet the expense of fixing their vehicles.
Only drivers who can’t afford more than minimum coverage should consider avoiding collision coverage. Keep in mind that this coverage type is required for most drivers with a car loan or lease.
The value of comprehensive coverage will become clear if your vehicle is damaged by something other than a collision. Common examples of situations where comprehensive insurance applies include damages caused by the following:
Comprehensive insurance is optional in every state, although lenders and leasing agencies typically require this coverage. Exclusions with this type of car insurance include vehicle repairs and medical bills after a collision.
Those who wouldn’t be able to pay for unexpected damage to their vehicles often select comprehensive coverage as an affordable up-front cost. It can be expensive to repair windshields, dents and other issues that would be considered covered losses with comprehensive coverage.
Unless you’re unable to afford anything beyond minimum liability car insurance, we recommend that you strongly consider comprehensive coverage.
Uninsured and underinsured motorist coverage will pay for medical bills and repairs to your vehicle if you’re hit by someone driving without car insurance. It’s illegal to drive without auto insurance in most states, but a study from the Insurance Research Council found that in 2019, 12.6% of American drivers didn’t have car coverage.
Twenty states and the District of Columbia require drivers to carry uninsured motorist coverage, while 12 states mandate underinsured motorist coverage. The table below lists the locations that require these types of car insurance.
Drivers are required to carry uninsured motorist coverage in the states listed above, but even those living in other states may want to purchase this type of car insurance. It’s a smart choice for those who wouldn’t be able to pay for damages if they got hit by an underinsured or uninsured driver.
MedPay and PIP could cover your medical expenses in this situation, while collision insurance may take care of your car repairs. Drivers who opt out of those coverages may want to get uninsured motorist coverage in their place.
Medical payments coverage, often known as MedPay, covers certain medical expenses, funeral costs and health insurance deductibles for motorists who end up in car accidents. You and your passengers will receive protection through MedPay regardless of which driver caused the collision.
MedPay coverage is optional in most states. However, it’s mandatory in three states and has the following minimum coverage limits:
Be aware that MedPay and PIP cannot be purchased on the same auto insurance policy. Since these types of car insurance coverage have many similarities, you’ll need to pick just one.
Those in Maine and New Hampshire must buy medical payments coverage, while Pennsylvania drivers should consider it as well. For other motorists, MedPay offers a cost-effective method for covering significant medical expenses.
Drivers don’t need to consider MedPay if they already carry PIP. These types of car insurance coverage are similar and overlap in various ways.
Personal injury protection (PIP) takes care of certain medical bills, funeral costs and child care services after car accidents. This type of car insurance is required in no-fault states or places where each driver’s damages are covered by their own insurer regardless of who caused an accident.
Drivers in 12 states must carry PIP insurance, while Pennsylvania drivers have to choose between this and MedPay. Details on state car insurance policy limits are listed below:
Residents of the locations listed above are required by state law to carry PIP insurance, but others may want to consider this type of car insurance as well. PIP is relatively similar to MedPay, but it comes with more extensive coverage offerings.
PIP insurance is typically inexpensive, and the medical bills from one car accident will likely make up the cost of coverage. Drivers who feel comfortable taking care of unexpected medical costs on their own may be able to look past PIP, though. Since PIP isn’t available everywhere, some drivers may want to consider MedPay instead.
Other auto insurance coverages are available, though they’re less common than those listed above. A few additional types of car insurance include:
While some other types of car insurance can be found, the ones above are some of the most valuable options for motorists who’d like more coverage.
Multiple companies offer cheap car insurance with exceptional protection, and some standout coverage options include Geico, State Farm and USAA. It’s worth comparing car insurance quotes from providers before picking an auto insurer, and the options below each represent a great place to start.
It’s difficult for motorists to look past Geico, as it offers all major types of car insurance at rates that are typically quite affordable. On top of that, drivers can find reassurance in the company’s ability to pay out claims due to its A++ financial strength rating from AM Best.
Geico scored about average in the J.D. Power 2021 U.S. Auto Insurance StudySM across all regions and performed similarly in the J.D. Power 2021 U.S. Auto Claims Satisfaction Study℠. The insurance offered by Geico is quite robust and comes at rates that can make buying multiple types of coverage affordable.
Keep reading: Geico insurance review
There’s good reason for drivers to select coverage from State Farm, as the company is known for its high service standards. One of the provider’s major upsides is its wide range of local insurance agents, who often make State Farm feel like a smaller company than it is.
Drivers can purchase all major types of car insurance through State Farm, and the company has an A++ financial strength rating from AM Best. The provider also scored above average for almost every region in the J.D. Power Auto Insurance Study, showing its emphasis on serving drivers.
Keep reading: State Farm insurance review
Those who are in the military, veterans or related to military members should strongly consider coverage from USAA. It’s clear that drivers enjoy working with USAA, as the provider earned the highest score in every region of the J.D. Power Auto Insurance Study.
Rates are typically low with USAA, making it an even more appealing option. USAA has strict eligibility requirements, so not all drivers will be able to purchase car insurance from this provider.
Keep reading: USAA insurance review
The three key types of car insurance are liability insurance, collision coverage and comprehensive insurance. Liability insurance covers damages caused to other people, while collision and comprehensive coverage take care of repairs that must be done for your car.
Basic car insurance is known as liability insurance, and it has two main parts. Bodily injury liability insurance covers medical bills for other drivers in an accident where you’re at fault, while property damage liability insurance takes care of damage to their vehicle.
The most basic car insurance policy is minimum coverage car insurance. The amount of insurance it takes to meet your state minimum varies, so you’ll need to factor in laws specific to your location.
The five basic types of car insurance are liability insurance, collision coverage, comprehensive insurance, uninsured motorist coverage and either medical payments coverage or personal injury protection.
Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best car insurance companies. We collected data on dozens of auto insurance providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the insurers that scored the most points topping the list.
In this article, we selected companies with high overall ratings and cost ratings. The cost ratings were informed by auto insurance rate estimates generated by Quadrant Information Services and discount opportunities.
*Data accurate at time of publication.
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