1. Liability Coverage

Liability insurance is required in almost every state. It covers damages or injuries you may cause to others in an accident. There are two main components:

• Bodily Injury Liability (BIL): Covers medical expenses, lost wages, and legal fees if you injure someone in an accident. For instance, if you rear-end another car and the driver requires medical treatment, your BIL will cover their hospital bills.

• Property Damage Liability (PDL): Covers damages to someone else’s property. For example, if you accidentally crash into a neighbor’s fence, PDL pays for the repairs.

Typical Coverage Amounts: $25,000 per person for bodily injury, $50,000 per accident, and $25,000 for property damage (25/50/25), though higher limits are often recommended.

2. Collision Coverage

Collision insurance covers the cost of repairing or replacing your car if it’s damaged in an accident, regardless of who’s at fault. This coverage is often required if you lease or finance your car.

• Example: You lose control on an icy road and crash into a tree. Collision coverage will pay for the repairs to your car, minus your deductible.

Deductibles: Typically range from $250 to $1,000. Higher deductibles lower your premiums but increase out-of-pocket costs.

3. Comprehensive Coverage

Comprehensive insurance covers non-collision-related damages to your vehicle, such as theft, vandalism, or natural disasters.

• Example: If a hailstorm damages your car or a tree branch falls on it during a storm, comprehensive coverage takes care of the repair costs.

Key Tip: Comprehensive coverage is often bundled with collision coverage and is usually required for leased or financed cars.

4. Uninsured/Underinsured Motorist Coverage

Comprehensive insurance covers non-collision-related damages to your vehicle, such as theft, vandalism, or natural disasters.

• Example: If a hailstorm damages your car or a tree branch falls on it during a storm, comprehensive coverage takes care of the repair costs.

Key Tip: Comprehensive coverage is often bundled with collision coverage and is usually required for leased or financed cars.

5. Personal Injury Protection (PIP)

Also known as "no-fault insurance," PIP covers medical expenses and sometimes lost wages for you and your passengers, regardless of who is at fault in an accident.

• Example: After a minor fender bender, PIP can cover the medical bills for you and your passengers, even if the other driver’s insurance is delayed in processing the claim.

Availability: Required in some states, optional in others.

6. Gap Insurance

Gap insurance covers the difference between what you owe on a financed car and its actual market value if it’s totaled in an accident.

• Example: If your car is worth $15,000 but you still owe $20,000 on your loan, gap insurance pays the $5,000 difference.

Who Needs It: Highly recommended for anyone leasing or financing a car.

7. Additional Coverage Options

Roadside Assistance: Covers towing, lockout services, jumpstarts, and more.

• Example: Your battery dies on a cold morning. Roadside assistance sends someone to jumpstart your car.

Rental Car Reimbursement: Pays for a rental car while your vehicle is being repaired.

• Example: After an accident, you need a rental for two weeks. This coverage reimburses you for the cost.

Custom Equipment Coverage: Protects aftermarket additions like custom wheels, sound systems, or performance modifications.

• Example: You’ve installed a custom stereo system, which gets damaged in an accident. This coverage pays for the replacement.