What are the two main types of car insurance?

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In a nutshell...
  • The two main types of auto insurance are property damage coverage and bodily injury coverage
  • Coverage may vary depending on whether the damage is to you or your property, or someone else or their property
  • Some types of insurance are required, while others are optional

Auto insurance coverage can be divided into two main categories.

These two categories are coverage for damage to property and coverage for bodily injury.

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Other Types of Coverage

There are multiple types of coverage within these broad categories other than property and bodily injury.

There is a variety of supplemental coverage including:

  • Rental insurance
  • High-risk insurance
  • Classic auto insurance
  • Non-owners insurance

Some coverage is mandatory depending on the state you reside in; other coverage may be optional.

According to the Insurance Institute for Highway Safety, your coverage may also differ depending on who is injured, whose property is damaged, and who is it at fault.

Property Damage

If you are in an accident, there could be damage to your car, to someone else’s car, or to other property.

All of these kinds of damage can be covered, but you need to be sure your policy includes these different kinds of coverage.

These coverages include:

  • Collision coverage – is for damage to your car, from an accident in which you are at fault.
  • Property damage liability insurance – covers damage to someone else’s vehicle or other property, such as a fence or tree, as a result of an accident you caused.
  • Comprehensive coverage – insures you against your car being stolen, or damage to your car from something other than an accident. An example of this would be if your car were vandalized, or a tree fell on it.

If you are in an accident and your car is badly damaged, you may choose not to repair it, but to buy a new vehicle instead.

Or, your insurance company may determine that your car is a total loss and take possession of your car in exchange for the claim payment.

Bodily Injury

Several states in the U.S. have no-fault insurance requirements.

This means that your insurance policy will pay for your injuries, regardless of who is determined to be at fault for the accident.

If the costs of your injuries exceed the limits of your policy, you can sue the at-fault driver for the additional costs.

Here are the two types of bodily injury coverage:

– Personal Injury Protection (PIP)

Insurance coverage for bodily injury is no-fault states is sometimes referred to as Personal Injury Protection coverage.

PIP insurance covers your costs for bodily injuries sustained in an accident and limits your right to sue for costs related to your injuries, even if the other driver is found to be at fault.

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– Medical Payment Coverage

If you live in any other state, you have traditional tort insurance.

This means that medical payment coverage will cover bodily injury costs for you and the passengers in your vehicle.

The medical costs associated with injuries sustained in a car accident can add up quickly, and you could be personally liable for costs above and beyond the limits of your policy.

When you are comparing auto insurance policies, be sure you opt for enough coverage for bodily injury.

Mandatory Insurance Coverage

All states require that you have the ability to pay for an accident you cause, including property damage and bodily

If you do not purchase auto insurance to cover these costs, there are a handful of states that will allow you to show that you are able to cover these costs.

This will waive the requirement for you to purchase auto insurance.

Most states also require that you have uninsured motorist coverage, which will pay for damages caused by a driver who does not have insurance coverage, or in the case of a hit-and-run accident.

Insurance that May Be Required by Your Lender


If you take out a loan to buy your car, your lender may require you to have comprehensive or collision coverage on your vehicle.

They want to be sure that you can afford to have the car repaired in the event of an accident.

If you did not take out a loan for your car, you are not required to maintain comprehensive or collision coverage on your car.

Keep in mind that if you choose not to have comprehensive or collision insurance on your car, you would be responsible for the cost to repair or replace your vehicle should it be damaged or stolen.

Buying the Right Coverage

If you have questions about purchasing the right insurance coverage, check with your state’s Division of Insurance.

They should have information on their website about what coverage in required in your state and what is optional.

Determine what coverage you need, check the prices from each company on the exact same coverage.

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