Car insurance laws vary from state to state, but all states have auto insurance coverage requirements that include some type of car insurance or proof of financial responsibility. Even though it may seem like an extra cost, car insurance protects you, your family and your vehicle if you’re in an accident or if your vehicle is damaged.
Several factors, including your driving record and insurance history, affect the type of insurance policy available to you. If you have a clean driving record and have been insured in the past, you’ll most likely qualify for standard auto insurance coverage.
Generally, if you have had a lapse in insurance coverage or have a less-than-perfect driving record, you can still qualify for auto insurance. This type of insurance is known as nonstandard auto insurance.
Many state auto insurance laws require some level of these coverages.
Bodily injury liability
This coverage applies to injuries that you, the designated driver or policyholder, cause to someone else. You and family members listed on the policy may also be covered when driving someone else’s car with their permission.
Medical payments or personal injury protection (PIP)
This coverage pays for the treatment of injuries to the driver and passengers of the policyholder’s car. At its broadest, PIP may cover medical payments, lost wages and the cost of replacing services normally performed by someone injured in an auto accident. It may also cover funeral costs.
Property damage liability
This auto insurance coverage pays for damage you (or someone driving the car with your permission) may cause to someone else’s property. Usually, this means damage to someone else’s car, but it also includes damage to lamp posts, telephone poles, fences, buildings or other structures your car hits.
This coverage may pay for damage to your car resulting from a collision with another car or object or as a result of flipping over. It may also cover damage caused by potholes.
This coverage may reimburse you for loss due to theft or damage caused by something other than a collision with another car or object. Damage might be caused by fire, falling objects, earthquakes, windstorms, hail, floods, vandalism or contact with animals.
States do not require that you purchase collision or comprehensive coverage. If you have a car loan, your lender may insist you carry it until you repay your loan.
Uninsured and underinsured motorist coverage
This coverage may reimburse you, a member of your family or a designated driver for damages incurred if one of you is hit by an uninsured or hit-and-run driver.
Underinsured motorist coverage comes into play when an at-fault driver doesn’t have enough insurance to pay for your total loss. This coverage may also protect you if you’re hit as a pedestrian.