What Does Car Insurance Cover?

What Does Car Insurance Cover?

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Car insurance helps cover your expenses after you get into a car accident. Understanding what's covered by different types of car insurance is important, as it will help guide you to choosing the coverage that's right for you. It will also help you avoid paying for coverage that might not make sense for you.

What car insurance covers

The financial protection offered by auto insurance varies depending on what kind of coverage you purchase. The most common types of car insurance coverages include:

Coverage
What it covers
Bodily injury (BI) liabilityCovers the medical bills of the other driver in an accident if you are at fault
Property damage (PD) liabilityCovers the cost to repair or replace someone else's property if you are at fault
CollisionCovers any damage to your car in a collision, no matter who was at fault
ComprehensiveCovers damage to your car that isn't caused by a collision
Uninsured/underinsured motoristCovers damage if the at-fault driver can't pay
Personal injury protection (PIP)Covers medical expenses of you and your passengers, no matter who is at fault in an accident

Car insurance coverage explained

Liability insurance: Covers damage to others when you are at fault

If you cause damage to another driver or even your own passengers in a collision, your liability insurance will cover the cost of repairs or medical care.

There are two types of liability insurance:

  • Bodily injury (BI) liability insurance covers the medical bills of the other party in an accident. If you hit a pedestrian or collide with another car and injure the passengers, your BI insurance will pay for their medical bills.
  • Property damage (PD) liability insurance covers the costs of repairs to or replacement of another person's property. For example, if you slam into your neighbor's mailbox or hit a colleague's car, your liability insurance will pay for a new mailbox or your colleague's repairs.

Insurers generally structure your liability insurance policy as three numbers in a row, like 25/50/30 or 15/30/5. These numbers, known as "split limits," represent the maximum amount your insurer will pay for:

  • Bodily damage to one person
  • Bodily damage to all people involved in the accident
  • Property damage in an accident

Each state sets its own minimum requirements for liability coverage. All states except New Hampshire require drivers to have some kind of liability insurance. Most states require drivers to have both bodily injury and property damage liability insurance. Only Florida allows drivers to carry property damage insurance without also carrying bodily injury insurance.

Collision insurance

Collision insurance covers any damage your car sustains in a collision, no matter who was at fault. Collision insurance will help pay for repairs if your car was damaged in a collision with another car, as well as if you collide with an object such as a tree or mailbox.

Comprehensive insurance

Comprehensive insurance covers any damage not caused by a collision with another car or object. Comprehensive insurance covers damage ranging from theft and vandalism to natural disasters.

No states require collision and comprehensive insurance . If you do choose to add collision and comprehensive insurance to your state's minimum coverage requirements, many insurers call this combination "full coverage."

Uninsured/underinsured motorist insurance: Covers damage if an at-fault driver cannot

One in 8 drivers on the road is uninsured. Also, many drivers are underinsured, only carrying the minimum amount of insurance required by their state.

Even if you are insured, there is always the risk of getting in a collision with a driver who can't cover the expenses of damage they cause. Uninsured/underinsured motorist insurance (UIM) covers damage if an at-fault driver does not carry insurance or if their insurance will not cover the full cost of the accident. This can cover both bodily injury and property damage. Some states require drivers to carry uninsured/underinsured coverage, while others do not.

Personal injury protection and medical payments coverage

Personal injury protection (PIP) covers medical expenses no matter who's at fault in an accident. Medical payments coverage (MedPay) is another kind of car insurance that covers medical bills. While both PIP and MedPay cover medical costs associated with an accident, PIP is much more extensive. For example, PIP can cover psychiatric care, lost wages, prescriptions and transit to and from doctor appointments.

Twelve states require drivers to have personal injury protection, and it's optional in 38 other states.

Additional types of insurance coverage

Many drivers choose to add on forms of optional coverage for extra security. Most of these additional coverages are only available if you’ve bought collision and comprehensive insurance.

  • Gap insurance: Covers the gap between the actual cash value of a car at the time of the accident and the amount still owed on your loan. Collision and comprehensive coverage only pay out the car’s current value, which could include months or years of depreciation. If you have financed or leased your car, gap insurance enables you to pay back your loan in full if your car is stolen or totaled.
  • Roadside assistance: Pays for help from a mechanic or tow truck, such as if you have a flat tire or need a tow.
  • Rental reimbursement coverage: Covers the cost of a rental car when your car is in the shop after a covered accident.
  • Rideshare insurance: Covers any accidents while you're driving for a company like Uber or Lyft. While Uber and Lyft cover you while you're picking up or dropping off a passenger, they don't provide coverage when you are waiting to be assigned a customer. Rideshare insurance provides coverage during this gap period when you are not covered by the rideshare app.
  • New car replacement insurance: Pays for a replacement car of the same make and model if your new car is totaled in an accident.

Who is covered by car insurance?

An insurance policy covers the individual policyholder who purchases it. If multiple drivers regularly use the same car, or live together, policyholders should add these drivers to their insurance to ensure they are also covered. If one policyholder drives multiple cars, they should add the cars to the policy so they're all covered. Ever wondered who should be added to your car insurance policy? The answer varies from insurer to insurer, but as a general rule, you should add someone to your auto insurance policy if they live in your household, have a driver’s license and can regularly access your car. This includes:

  • Spouse or romantic partner
  • Teens
  • Family members
  • Nanny or babysitter
  • Roommate

Even if someone is not in your immediate family, you should add them to your policy if they frequently drive your car . Not adding them means you risk being denied coverage if they get in an accident. Ask your insurer who your policy covers before you let someone else drive your car. Some insurance policies only cover drivers specifically listed on the policy, while others have a permissive user clause. This clause guarantees coverage if someone else is driving your car in a one-off situation, such as if you loan your car to an out-of-town guest or ask a friend to drive you home from a party.

What does car insurance not cover?

Car insurance does not cover nonaccident car repairs . In other words, insurers do not offer coverage for repairs that are not the direct result of an accident. The only exceptions are if you have:

  • Mechanical breakdown insurance (MBI): This coverage functions like an extended warranty and provides coverage for major repairs such as bad brakes, a busted engine or transmission problems.
  • Car problems that result from an accident but emerge later.
  • Vehicle damage covered by a warranty.

Additionally, your insurer might not cover you if you use your car for business purposes, including driving for a ride-hailing service, unless you have commercial use coverage or rideshare coverage. Insurance companies make a distinction between personal and commercial use of cars. If you use your car to give rides or deliver food through services like Uber and Uber Eats, you have essentially turned your personal car into a business car.

Frequently asked questions

Does car insurance cover damage caused by road debris?

If you have comprehensive coverage, it will typically cover your car if it is damaged by road debris.

Does car insurance cover damage to roof racks?

While factory-installed roof racks are covered by insurance, if you install a roof rack on your car yourself, it is usually considered a modification. Ask your insurer if roof racks are covered with your current policy or if you'll need special coverage.

Does car insurance cover rust damage?

Rust damage is usually not covered by car insurance. Rust damage is considered normal wear and tear on a vehicle.

Does auto insurance cover lightning strikes?

Comprehensive car insurance will cover your car if it's damaged by a lightning strike. Comprehensive coverage also covers other weather-related damage, such as damage from hail or flooding.

Does insurance cover a broken tail light?

Depending on how your tail light was broken, your insurance might cover it. For example, comprehensive coverage will cover your broken tail light if it was damaged by a falling tree branch. Collision insurance typically covers a broken tail light if it was damaged in an accident. The other driver's liability insurance might cover your broken tail light if it was damaged in an accident and you were not at fault. But a burned-out light bulb or a defective tail light likely won't be covered by insurance.

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