Auto insurance agrees to pay all or part of the costs resulting from an accident, theft, or damage to your car. In exchange for this coverage, you pay an insurance premium to the coverage provider. Let’s understand a little more about it and what it covers.

There are five types of auto insurance to cover different issues.


This mandatory insurance coverage pays to repair damages caused to other drivers and vehicles by you. It also covers the other driver’s bodily injury and any property damage. Without liability coverage, you’d have to pay the other driver’s medical bills, car repair bills, and pay to repair any property damage you cause.


This pays for any damage caused to your vehicle by other cars. It doesn’t pay the damages for other cars involved. This coverage is optional and may be required in case you’re financing a car. It is more expensive than a liability and usually includes a deductible, which you pay out of pocket to save on the insurance premium you pay. So in case the other driver is at fault and their insurance can’t cover your repairs, your collision insurance will pay for it.


This covers everything that the above two don’t. It pays for damage to your car caused by anything other than an accident. This is optional too but is usually required if you’re financing a car. In case your vehicle is stolen, it will pay off your debt. It also covers damage from vandalism, animals, falling objects, storms, and natural disasters.

Uninsured and Underinsured Coverage

This protects you in case the other driver does not have any or enough insurance. It also covers injuries to your passengers. It’s important because there are a lot of people driving without adequate insurance. This one is optional too but not expensive. It acts as supplemental liability for the other driver and is the amount of coverage is usually equal to your liability coverage.

Personal Injury Protection

The last type of coverage pays for any additional medical and hospital expenses, regardless of who was at fault. It covers lost wages, service replacement, rehab costs, and funeral costs too. This coverage also pays out faster than others.