What is auto insurance?
Auto insurance combines several coverages that address different consequences of owning and driving a vehicle. Some protect other people when an insured driver is legally responsible for an accident; others help with damage to the insured vehicle or injuries to people in it.
Required coverages and minimum limits vary by state. A legal minimum may be less protection than a household needs, so it is useful to compare limits, deductibles, exclusions, and optional coverages rather than looking at premium alone.
The main parts of an auto policy
The selections shown on a declarations page commonly include:
Bodily injury and property damage liability
May pay covered claims when an insured driver is legally responsible for injuring someone or damaging another person's property, up to the selected limits.
Collision
May pay to repair or replace the insured vehicle after a collision with another vehicle or object, subject to the deductible and settlement terms.
Comprehensive
Often addresses covered non-collision losses such as theft, hail, fire, falling objects, glass damage, or contact with an animal.
Uninsured and underinsured motorist
May help with covered injuries, and in some states certain property damage, when the responsible driver has no insurance or insufficient limits.
Medical payments or personal injury protection
Depending on the state and policy, may pay specified medical expenses or other covered costs regardless of fault.
Common limitations and gaps
- Routine maintenance, mechanical breakdown, wear and tear, and diminished value are generally not part of standard physical-damage coverage.
- Using a vehicle for delivery, rideshare, livery, or other business purposes may be excluded or require an endorsement or commercial policy.
- Custom equipment, permanently installed electronics, rental reimbursement, towing, and roadside assistance may have separate limits or require optional coverage.
- A loan or lease payoff can exceed a vehicle's actual cash value; gap coverage is separate and its terms vary.
What affects your coverage needs
- Drivers in the household and their driving records
- Vehicle type, use, annual mileage, and garaging location
- Assets and income that inform liability-limit decisions
- Loan or lease requirements
- Preferred deductibles and ability to absorb an out-of-pocket loss
What to compare between policies
- Liability limits and whether they are split or combined
- Deductibles and the valuation used after a total loss
- Who qualifies as an insured driver and how permissive use is treated
- Exclusions for business use, household drivers, or vehicle types
- Optional coverages, their limits, and claim-service features
A practical next step
Gather your current declarations, a list of the people and property that need to be insured, and any questions about limits or exclusions. Those details make it easier to compare policies on coverage as well as price.
Coverage availability, terms, limits, and eligibility vary by insurer and state. Coverage can be confirmed only by the issued policy and applicable endorsements.