US car insurance policies include several types of coverage, some of which are mandatory or optional, depending on where you live. Almost every state requires drivers to carry some form of auto insurance and sets a minimum coverage amount. The price of auto insurance will vary depending on the type and amount of coverage, your chosen deductible, and other factors.
Car accidents in the US can be costly, especially if your vehicle is severely damaged or someone is injured. Car insurance helps you pay your bills and protects you from potentially catastrophic financial liabilities.
What does car insurance cover?
Car insurance policies include several types of coverage, some of which are mandatory in most states, while others are optional. The most common coverages include:
- Bodily injury liability coverage. If you are involved in an accident that injures another driver or their passengers, and you are at fault, this coverage will help you cover all related expenses, up to your policy limits. This coverage is required in 49 US states and the District of Columbia. (New Hampshire is an exception; it allows drivers to waive insurance but "strongly recommends" them to purchase it. However, proof of insurance is required in certain circumstances.)
- Property damage liability coverage. This coverage covers any damage you cause to another driver's vehicle or other property (such as a neighbor's fence). Almost every state requires this coverage.
- Collision coverage. Collision coverage covers damage to your vehicle in the event of an accident. This coverage is optional in every state.
- Comprehensive coverage. Also known as "non-collision coverage," comprehensive coverage covers damage to your vehicle caused by causes such as flooding, fallen trees, or fire. It also protects you if your vehicle is stolen. Like collision coverage, comprehensive coverage is optional.
- Medical payments (MedPay)/personal injury protection (PIP). In some states, MedPay or PIP are mandatory and cover medical expenses and related costs if you or your passengers are injured in an accident. 6. Uninsured or underinsured motorist coverage. This coverage can cover the difference if you're involved in an accident with someone who doesn't have auto insurance or whose insurance isn't sufficient to cover the damage they cause. In some states, it's mandatory.
- Gap insurance. If you're leasing a car or have an outstanding auto loan, you might also consider purchasing a type of coverage called gap insurance. If your vehicle is declared a total loss after an accident, gap insurance will cover the difference between the amount your auto insurance company pays and the amount you still owe on your lease or loan.
Who does auto insurance cover?
Generally speaking, a personal auto insurance policy covers the policyholder and any family members listed as drivers on the policy. Policies also typically cover anyone who is not covered by your policy but who drives your vehicle with your consent.
What doesn't auto insurance cover?
It's important to understand that auto insurance doesn't cover every situation you might encounter. Here are some things it typically doesn't cover:
- Wear and tear. Every car experiences wear and tear from everyday use, such as worn tires, minor paint scratches, worn brakes, or blown headlights. However, car insurance doesn't cover these repair costs. Car insurance is designed to protect you against unexpected events, such as collisions.
- Routine maintenance. Regular maintenance, such as oil changes or tire rotations, is essential to keeping your vehicle running well. However, these expenses are not covered by car insurance.
- Rideshare driving. If you drive for a rideshare company, your car insurance likely won't cover you. You can purchase a rideshare rider to ensure adequate coverage.
- Excluded drivers. You can choose to exclude specific drivers from your policy. This means your vehicle won't be covered while they're driving.
- Driving outside the United States. Your policy will generally cover you for interstate driving, but if you plan to travel to another country, such as Mexico, this may not be the case. However, your policy may cover you in Canada. If you plan to drive internationally, contact your insurance company to see if you can add coverage.
- Intentional damage. Car insurance doesn't cover damage you intentionally cause to your vehicle. Intentionally damaging your vehicle to get an insurance payout is insurance fraud.
- Racing. Your car insurance policy may not cover any damage to your car caused by racing.
- Custom parts. Some policies don't cover custom car parts or modifications not installed by the car manufacturer. However, some insurance companies offer a custom parts and equipment rider that provides this coverage.
- Pet injuries. Car insurance typically doesn't cover injuries sustained by pets in a car accident. However, some companies offer optional pet injury coverage that you can add to your policy for an additional fee.
- Personal property. Any personal property in your car that is damaged or stolen may not be covered by your car insurance. This could include cash, laptops, cell phones, wallets, and anything else you keep in your car. However, check with your homeowners insurance company to see if these policies cover personal property.