Insurance policies are written by lawyers and priced by actuaries. Here's what each piece actually does for you — so you only pay for what you need.
Liability coverage pays for injuries and property damage you cause to other people. It's split into bodily injury (their medical bills, lost wages, legal costs if you're sued) and property damage (their car, their fence, their storefront). It never pays for your own car or your own injuries.
State minimums are famously low — some states require as little as $15,000 per person of bodily injury coverage. One ambulance ride and an overnight hospital stay can burn through that before lunch. If you're found at fault for more than your limits, the difference can come out of your assets.
Collision pays to repair or replace your own car after an accident — regardless of who was at fault. Hit another car, a guardrail, a pothole from hell — collision picks up the bill minus your deductible.
If your car is financed or leased, your lender almost certainly requires it. If your car is older and paid off, run the math: when the annual premium plus deductible approaches the car's actual cash value, collision stops earning its keep.
Comprehensive covers damage that happens when you're not driving: theft, vandalism, hail, floods, fire, falling branches, cracked windshields, and animal strikes. In deer country and hail states, this is the coverage that gets used.
It's usually cheap relative to collision because parked cars generate fewer claims than moving ones. Like collision, it pays actual cash value minus your deductible.
Roughly one in seven drivers on US roads carries no insurance at all, and plenty more carry bare state minimums. If one of them hits you, uninsured motorist (UM) coverage steps in for your medical bills — and in some states, your vehicle damage — when the at-fault driver can't pay.
Underinsured motorist (UIM) covers the gap when the other driver's limits are too low for your actual damages. Given how low state minimums are, that gap is common in any serious accident.
PIP covers your own medical bills, lost wages, and even essential services (like childcare) after an accident — no matter who caused it. It's mandatory in no-fault states like Florida, where every driver must carry at least $10,000 of PIP.
MedPay is the smaller, simpler cousin available in other states: it covers medical bills for you and your passengers, and it works regardless of fault, with no deductible.
Roadside assistance handles tows, jump-starts, flats, lockouts, and fuel delivery — usually a few dollars a month. Rental reimbursement pays for a rental car while yours is in the shop after a covered claim; without it, a two-week repair means two weeks of rideshares out of pocket.
Gap coverage matters if you financed with little money down: it pays the difference between what you owe on the loan and what the car is actually worth if it's totaled. New cars can be "underwater" the moment they leave the lot.
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