Car Insurance

The five types of car insurance

A key component of car ownership is insurance. In fact, liability insurance is mandatory in all but one state. Driving ability and habits, type of car, where you live – urban or rural community? – and where you park – on the street or in a garage? – all factor into the types of car insurance you may need. Insurance agents can help ensure your policy meets your state's minimum insurance requirements; they can offer you a variety of plans that provide varying degrees of protection at varying prices. Be sure to shop around for car insurance and get several quotes before you make a decision. Ultimately, you want a plan that offers you the best protection you can afford. Before you get started, here's a primer on the five basic types of car insurance available.

Collision

Collision insurance will pay for repairs for damage done to your car as the result of an accident. This includes coverage for the cost of repairs up to the cash value of your car after subtracting the cost of your deductible. Your car is totaled when its value is surpassed by the cost of repairs. Collision coverage is optional in all states but may be required if you have a lienholder.

Comprehensive

Comprehensive coverage protects your vehicle if it's damaged by events unrelated to driving, such as theft, vandalism, hitting an animal or bad weather. Comprehensive coverage is typically optional but may be required if you have a lienholder.

Liability

Liability insurance covers you if you have an accident in which you are found to be a fault. It covers costs related to bodily injuries and property damage, including medical, funeral and legal expenses, loss of income, and pain and suffering. Liability coverage is mandatory in every state except New Hampshire.

Personal injury

Personal injury insurance covers the cost of medical expenses associated with an accident for you and your passengers regardless of who's at fault. Medical and funeral expenses, lost wages and loss of essential services are among the things personal injury insurance covers. It's required in some states, optional in others and not available in 28.

Uninsured and underinsured motorist

Uninsured and underinsured motorist insurance covers property damage and medical expenses when you have an accident in which the responsible party either doesn't have insurance or doesn't have enough insurance to cover the cost of the damage incurred. This type of insurance is optional in some states and required in others.