The kind of car insurance you need depends on your budget, risk tolerance, and legal requirements in your state or country. Here’s a breakdown of essential and optional coverage:
Essential Coverage (Recommended for Everyone)
Liability Insurance (Required in most states)
Bodily Injury Liability (BI): Covers medical expenses and lost wages of others if you’re at fault.
Property Damage Liability (PD): Pays for damage to another person’s property (e.g., their car, fence, or building).
Uninsured/Underinsured Motorist Coverage (Highly Recommended)
Protects you if you’re hit by a driver with little or no insurance.
Covers medical expenses, lost wages, and sometimes vehicle damage.
Personal Injury Protection (PIP) or Medical Payments (MedPay)
Pays for medical bills for you and your passengers, regardless of who caused the accident.
Required in no-fault states.
Optional But Useful Coverage
Collision Coverage
Pays for repairs to your car after an accident, regardless of fault.
Required if you have a car loan or lease.
Comprehensive Coverage
Covers non-collision-related damage (theft, vandalism, fire, natural disasters, falling objects, animal collisions).
Often required for financed or leased vehicles.
Gap Insurance (If You Have a Loan or Lease)
Covers the difference between what you owe on your car and its current market value if it’s totaled.
Roadside Assistance
Helps with towing, flat tires, lockouts, and breakdowns.
Rental Car Reimbursement
Pays for a rental car while your vehicle is being repaired after a covered accident.
How to Decide What You Need
If you drive an older car, you might skip collision and comprehensive if the cost exceeds the car’s value.