Types of Car Insurance Coverage

Car insurance can be confusing, and it can be hard to know which coverage option is best and how much you need. You can purchase a few types of car insurance coverage and add optional coverages to your policy, depending on what the insurer offers. 

To know which type of insurance is best for you, it’s important to understand what each type of car insurance covers. How much coverage you need will depend on your location, the type of car you drive, your personal situation, and your risk tolerance.

Main types of car insurance coverage

Liability-only coverage and full-coverage insurance are the two main types of car insurance coverage. While liability-only coverage is typically cheaper than full coverage, it doesn’t provide as much financial protection. You can also purchase add-ons — also known as optional coverages or riders — to get extra protection in various situations.

Liability-only coverage

Liability-only car insurance is a car insurance option that covers injury to another person and damage to their car if you cause an accident. However, it doesn’t cover your car’s damage or medical bills when you’re at fault. Because of that, you’ll have to pay for your own healthcare and repairs, unless the other driver caused the accident and has liability coverage to cover you.

Liability car insurance is typically cheaper than full-coverage car insurance. It costs $170 per month on average compared to $253 per month on average for full-coverage car insurance across the U.S. However, with that affordability comes the risk that you might not have enough coverage to pay for your damages and injuries if you cause an accident.

Liability auto insurance can include bodily injury, property damage, personal injury protection (PIP), uninsured/underinsured motorist, and medical payments (MedPay) coverages.

Full-coverage insurance

Full-coverage car insurance is a collection of different coverages. It typically includes liability insurance, collision coverage, and comprehensive coverage. On average, full-coverage car insurance costs $253 per month in the United States.

Most drivers choose full-coverage insurance over liability insurance. In fact, 79% of insured drivers purchase comprehensive coverage in addition to liability insurance, and 75% buy collision coverage, according to the Insurance Information Institute’s analysis of 2019 data from the National Association of Insurance Commissioners (NAIC).2

Additional coverage options

Depending on your personal circumstances, you might want to consider additional coverage options above and beyond traditional liability-only or full-coverage insurance. Here are some examples.

How to choose the right car insurance coverage types

Car insurance is intended to protect you financially when the unexpected happens. A serious car accident can lead to medical issues, property damage, and more. It’s important for your insurance to be adequate enough to cover you in a worst-case scenario.

When deciding on the right car insurance coverage for you, consider a few factors:

• Where you live

• Your assets

• How much of a deductible you can afford

• Your healthcare insurance and deductible

• The value of your car

You might live in an area prone to natural disasters, where you’d benefit from having coverage that protects you if your car sustains weather-related damage. You might have a high net worth or significant assets you want to protect in the event of a lawsuit. Additionally, you might or might not have the funds to cover a large deductible.

Speak with an insurance agent or your insurance company representative to determine what the best coverage might be for your particular personal situation. No one wants to think about a worst-case scenario, but if it happens, you’ll be glad you had adequate insurance to handle the unexpected.