Car insurance is required in nearly every state, but that doesn’t mean all policies are created equal. Many drivers assume they’re protected, only to discover after an accident that their “full coverage” isn’t so full after all.
The truth is, while laws differ by state, there are five key types of car insurance coverage that can make all the difference — no matter where you live in the U.S. If protecting your finances, your health, and your peace of mind matters to you, these are the coverages worth having.
1. Liability Insurance: Your Legal Foundation
Liability insurance is the backbone of every car insurance policy. It covers injuries or property damage you cause to others in an accident, and it’s required in nearly every state.
But here’s the problem: Most states only require low minimum coverage limits. If you cause a serious crash, those minimums often don’t come close to covering medical bills, lost wages, or vehicle repairs.
Why it matters: Imagine causing a multi-car accident that results in $150,000 in damages. If your state minimum only covers $25,000, you could be on the hook for the rest, out of your own pocket.
Tip: Experts recommend carrying at least $100,000 per person and $300,000 per accident for bodily injury liability, along with $50,000 or more for property damage. While it may increase your premium slightly, it could save you from life-changing financial stress. On average, adding higher liability limits raises your annual premium by just $100 to $200, depending on your state and driving history.
2. Uninsured/Underinsured Motorist Coverage (UM/UIM): Protecting Yourself
Not everyone on the road follows the rules. In fact, millions of drivers across the U.S. have little or no insurance at all.
UM/UIM coverage steps in when:
✔ The at-fault driver has no insurance
✔ The at-fault driver doesn’t have enough insurance
✔ You’re the victim of a hit-and-run
This coverage helps pay for your medical bills, lost wages, and other expenses — even when the other driver can’t.
Where it’s especially important: States with high uninsured driver rates, like Florida, Mississippi, and Michigan.
Tip: UM/UIM coverage typically adds $50 to $150 per year to your premium — a small price for peace of mind. Many policies allow you to match your UM/UIM limits to your liability coverage for maximum protection.
It’s also worth knowing: After an accident with an uninsured or underinsured driver, dealing with insurance companies can be frustrating and confusing. That’s why many people choose to contact nearby car accident lawyers who can guide them through the claims process and help ensure they aren’t left paying out of pocket for someone else’s mistake.
3. Collision Coverage: Your Car, Your Responsibility
Collision coverage helps repair or replace your vehicle after a crash, no matter who caused it.
While not required by law, it’s often required if you lease or finance your car. Even if your vehicle is paid off, collision coverage can save you thousands after an accident.
Without it, You could be stuck paying for repairs — or replacing your car entirely — out of pocket.
Tip: The average cost of collision coverage is about $300 to $400 per year, depending on your vehicle’s value. It’s generally recommended for cars worth more than $4,000 to $5,000, or newer vehicles still under financing. If your car is older with low resale value, you may consider dropping collision coverage to lower your premium.
4. Comprehensive Coverage: Beyond Collisions
Accidents aren’t the only threat to your vehicle. Comprehensive coverage protects against:
✔ Theft
✔ Vandalism
✔ Fire
✔ Natural disasters (like floods or hail)
✔ Falling objects
✔ Animal collisions
It’s an affordable way to cover unpredictable risks, especially if you live in an area prone to severe weather or high theft rates.
Tip: Comprehensive coverage typically costs around $150 to $300 per year. When bundled with collision coverage, it’s often part of what’s referred to as a “full coverage” policy. If you live in states like Florida, Texas, or California — where hurricanes, floods, wildfires, or theft are more common — comprehensive coverage is a smart investment to protect your vehicle.
5. Medical Payments or Personal Injury Protection (PIP): Immediate Help After a Crash
Medical bills can pile up fast, whether you caused the accident or not. That’s where Medical Payments coverage (MedPay) or Personal Injury Protection (PIP) comes in.
These coverages can help pay for:
✔ Emergency medical care
✔ Doctor visits
✔ Lost wages
✔ Funeral expenses (in severe cases)
In no-fault states like Florida, Michigan, and New York, PIP is required, providing immediate medical coverage regardless of who caused the accident.
Tip: MedPay and PIP add about $50 to $200 per year to your premium, depending on your coverage limits. Even with health insurance, these coverages help cover deductibles, co-pays, and other out-of-pocket medical expenses that can quickly add up after a crash. Many experts recommend carrying at least $5,000 to $10,000 in medical payments coverage for added protection.
Final Takeaway: Don’t Wait for a Crash to Find Out You’re Underinsured
Cheap policies that only meet state minimums might save you money now — but they can leave you dangerously exposed when the unexpected happens.
The smartest drivers? They review their coverage regularly, compare quotes, and make sure they have the protection they need, no matter where they live or travel.
Better coverage now can save you thousands later and make the difference between a minor inconvenience and a major financial disaster.