What does my car insurance actually cover?

How a car policy is put together

Many people choose auto insurance as a key part of their personal protection. In most states, you must buy insurance to drive legally. A policy is really a bundle of coverages: some pay other people when you cause a crash, and others pay for your own car and your own injuries.

Liability: Paying for Others

Liability insurance protects you when you are responsible for causing an accident. Bodily injury liability pays the other people's medical bills, lost wages, and pain and suffering. A second part, for property damage, pays to repair their car or other property you hit, like a wall or a fence.

If your liability limits do not cover all the damage and injury costs you cause, you may need to cover the remaining amount out of pocket. The person you hit might file a lawsuit against you. A state's minimum limits can run out fast in a crash involving several cars or a totaled car, so think about how much you have to protect when you choose limits.

Collision and Comprehensive: Protecting Your Car

Collision coverage fixes damage to your car after a crash with another vehicle or object. You do not have to buy this coverage, and the law does not force you to. Your lender or the company you lease from may still demand collision insurance.

Comprehensive coverage handles damage from causes other than collisions. This covers losses from fire, bad weather, vandalism, floods, and stolen cars. It also handles cracked or shattered glass, including windshields. The law does not force you to buy comprehensive coverage.

Uninsured and Underinsured Motorists

Uninsured motorist coverage protects you and your passengers. This type of coverage helps if you are injured by a driver who flees the scene or by a driver without insurance. Underinsured motorist coverage helps when the at-fault driver lacks enough insurance to cover your full loss.

Medical Payments and PIP

Medical payments coverage handles medical bills for you and your passengers. It also covers injuries if you are in a friend’s car or are walking or biking. Personal injury protection coverage works similarly but also covers lost income and other nonmedical expenses.

Lender Requirements and Deductibles

If you have a car loan, your lender will insist on collision and comprehensive coverage. These coverages come with deductibles, which is the amount you pay up front before the insurer pays. Choosing a higher deductible can reduce your premium.

Common questions

Last reviewed October 2026. Rules and prices can change; check the sources below for the official details.