The type of car insurance you should buy depends on your state’s requirements and your specific situation. Insurance is not a one-size-fits-all product. Evaluate the coverage and limits that work best for you..
How much car insurance you need will be different if you have a new, financed car and want the best policy possible versus if you have an older car and want just the required basics to be drive legally. Here are the primary types of car insurance and limit information:
Bodily injury and property damage liability are the foundation of an auto insurance policy and mandated in most states. These pay for damage and injuries to others if you cause an auto accident. Most states require a minimum amount of liability car insurance, but it’s wise to get higher limits if your budget allows.
Limits of at least $100,000 for bodily injury per person, $300,000 per accident and $100,000 for property damage (100/300/100) is a solid liability foundation.
Uninsured and underinsured motorist coverage
Uninsured and underinsured motorist insurance is required in some states and optional in others. Uninsured motorist (UM) coverage pays for your medical expenses if you’re hit by someone who doesn’t carry liability insurance. Underinsured motorist (UIM) insurance pays if the at-fault driver doesn’t carry enough liability insurance to cover your medical bills.
Limits for UM typically match your liability coverage limits.
Personal injury protection (PIP) or medical payments (MedPay) coverage
Required in some states and optional in others, personal injury protection insurance is often part of a no-fault insurance system. In no-fault states you’re required to make most injury claims on your own car insurance first, regardless of fault.
Medical payments coverage is similar in that it pays for your injuries from an auto accident and is required in a few states. If your state requires PIP or MedPay, you must get at least the minimums mandated. If optional, you can skip these for cheaper car insurance, especially if you have decent health care coverage that would pay for car accident injuries.
Collision and comprehensive insurance
Collision and comprehensive insurance are not required by state laws but usually mandated by financing companies if you have a car loan or lease. This coverage is often a good idea unless you drive a car of little value. They are two separate coverage types often sold together. The limit for either coverage type is the value of your totaled car at the time of the incident.
- Collision insurance pays for your vehicle’s repairs if your car is hit by another vehicle—regardless of fault. It also can pay out if you accidentally hit something, such as a pole.
- Comprehensive insurance pays out if your car is stolen or damaged due to issues, such as vandalism, fire, falling objects, severe weather or striking an animal.