While different states have different mandates for auto insurance, most basic car policies consist of six types of coverage. Here's what you need to know about each.
While different states mandate different types of insurance and there are several additional options (such as gap insurance) available, most basic auto policies consist of: bodily injury liability, personal injury protection, property damage liability, collision, comprehensive and uninsured/underinsured motorist.
Note that each type of coverage is priced separately, so there is variability in policy limits and pricing.
Bodily injury liability
Bodily injury liability coverage applies to injuries that you, the designated driver or policyholder, cause to someone else. You and family members listed on the policy are also covered when driving someone else’s car with their permission.
It’s very important to have enough liability insurance, because if you are involved in a serious accident, you may be sued for a large sum of money. It's recommended that policyholders buy more than the state-required minimum liability insurance, enough to protect assets such as your home and savings.
Medical payments or personal injury protection (PIP)
This coverage pays for the treatment of injuries to the driver and passengers of the policyholder's car. At its broadest, PIP can cover medical payments, lost wages and the cost of replacing services normally performed by someone injured in an auto accident. It may also cover funeral costs.
Property damage liability
This coverage pays for damage you (or someone driving the car with your permission) may cause to someone else's property. Usually, this means damage to someone else’s car, but it also includes damage to lamp posts, telephone poles, fences, buildings or other structures your car hit.
Collision
Collision coverage pays for damage to your car resulting from a collision with another car, an object, such as a tree or telephone pole, or as a result of flipping over (note that collisions with deer are covered under comprehensive). It also covers damage caused by potholes.
Collision coverage is generally sold with a separate deductible. Even if you are at fault for the accident, your collision coverage will reimburse you for the costs of repairing your car, minus the deductible. If you're not at fault, your insurance company may try to recover the amount they paid you from the other driver’s insurance company and, if they are successful, you'll also be reimbursed for the deductible.
Comprehensive
This coverage reimburses you for loss due to theft or damage caused by something other than a collision with another car or object. Comprehensive covers events such as fire, falling objects, missiles, explosion, earthquake, windstorm, hail, flood, vandalism, riot, or contact with animals such as birds or deer. It will also pay to repair your windshield if it is cracked or shattered.
Comprehensive insurance is usually sold with a separate deductible, although some insurers may offer the glass portion of the coverage without a deductible.
Uninsured and underinsured motorist coverage
Underinsured motorist coverage reimburses you, a member of your family, or a designated driver if one of you is hit by an uninsured driver or a driver who doesn’t have sufficient insurance to pay for your total loss. This coverage also offers protection in the event a covered driver is the victim of a hit-and-run or if, as a pedestrian, you are struck by an uninsured or underinsured motorist.
Next steps: Shopping for auto insurance? Here's how to find the right policy for you and your car.
FAQs
While different states mandate different types of insurance and there are several additional options (such as gap insurance) available, most basic auto policies consist of: bodily injury liability, personal injury protection, property damage liability, collision, comprehensive and uninsured/underinsured motorist.
What does the basic insurance cover? ›
Basic car insurance provides the minimum protection allowed by your state's laws. Depending on the state you live in, it typically covers property damage for another driver and may cover injuries for them and their passengers or you and your passengers.
What is the most basic type of vehicle insurance coverage? ›
However, most basic car insurance includes liability protection. In fact, most states require a certain limit for these policies. They may also want you to have uninsured/underinsured protection and comprehensive coverage. To make sure you get full protection, you'll want to talk with your insurance provider.
What does medical coverage on an auto insurance policy cover answers? ›
Medical payments coverage can help with medical expenses associated with an auto accident — for you, your passengers and any family members driving the insured vehicle at the time of the accident — no matter who is at fault. It typically covers doctor visits, hospital stays, surgery, X-rays and other medical bills.
What is the most basic car insurance? ›
The minimum amount of car insurance you'll typically need is state-required liability coverage. This allows you to pay for some, if not all, injuries and damages you're liable for in an accident. The most commonly required liability limits are $25,000/$50,000/$25,000, which mean: $25,000 in bodily injury per person.
What is basic auto insurance coverage? ›
While different states mandate different types of insurance and there are several additional options (such as gap insurance) available, most basic auto policies consist of: bodily injury liability, personal injury protection, property damage liability, collision, comprehensive and uninsured/underinsured motorist.
What does basic cover mean? ›
Basic coverage is a “Named Peril” policy, which means that for a loss to be covered, the peril must be listed by name on the declarations page. In addition, you carry the burden of proving that a loss was caused by an included peril. Basic Form is typically the cheapest of the three coverage options.
What is the difference between basic insurance and full coverage? ›
Liability insurance covers injuries and damages you cause to others and may also pay your legal expenses if you're sued after an accident. Full coverage typically includes collision and comprehensive insurance along with liability insurance and other mandatory coverages.
What are the four basic insurance coverage categories in an automobile policy? ›
Auto liability coverage. Uninsured and underinsured motorist coverage. Comprehensive coverage. Collision coverage.
What is the lowest level of car insurance? ›
Minimum Liability Insurance Requirements for Private Passenger, Commercial and Fleet Vehicles
- $15,000 for injury/death to one person.
- $30,000 for injury/death to more than one person.
- $5,000 for damage to property.
Most health insurance will not cover elective or cosmetic procedures, beauty treatments, off-label drug use, or brand-new technologies.
Should I add medical payments to my auto insurance? ›
It's generally a good idea to carry coverage equal to your health insurance deductible, so you can use MedPay to cover your out-of-pocket medical expenses. If you don't have health insurance, you should consider carrying a higher MedPay limit to help pay your medical bills after an accident.
How do you answer insurance questions? ›
Think deeply about the exact question the agent asked, and only provide that specific information. Never admit to fault. Never admit to even being partially at fault. Never admit that you are uninjured.
What is the meaning of basic insurance coverage? ›
Basic car insurance is a policy that only includes liability coverage. It helps cover the damage you may cause to other people and their property. That can include medical bills, repair or replacement of property and legal fallout. Almost every state has minimum basic auto insurance limits for their drivers.
Who is known for cheapest car insurance? ›
Among nationally available providers, USAA offers the cheapest minimum liability car insurance at 46% below average. If you don't have any military affiliation, Geico will be the most affordable option.
Which of the following is the most basic type of automobile insurance? ›
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.
What does basic contents insurance cover? ›
Contents insurance protects the things that make your home feel like yours. This includes your bed, sofa, computer, clothes and jewellery. If you ever lost all your possessions in a fire or flood, it would cost a lot to replace them.
What are 2 things typically covered by basic health insurance? ›
Health Insurance Benefits
- Hospital care.
- Visits to a primary care doctor and specialists.
- Outpatient procedures, like surgery.
- Laboratory tests and diagnostic services, like x-rays, exemption and blood tests.
- Pregnancy and newborn care.
- Preventive and routine care, like vaccinations and checkups.
Life insurance covers death due to natural causes, illness, and accidents. However, the insurance company can deny paying out your death benefit in certain circ*mstances, such as if you lie on your application, engage in risky behaviors, or fail to pay your premiums. Here's what you need to know.
What is covered by basic health insurance are some things not covered? ›
Health insurance typically covers most doctor and hospital visits, prescription drugs, wellness care, and medical devices. Most health insurance will not cover elective or cosmetic procedures, beauty treatments, off-label drug use, or brand-new technologies.
