Liability insurance that includes personal injury liability coverage and property damage liability coverage is mandatory in almost every state Comprehensive Personal Injury Protection (PIP): covers the cost of various damages to your car not caused by a collision, such as fires and robberies. As with collision coverage, you should choose a deductible. The higher the deductible you choose, the lower your premium. Comprehensive coverage is generally sold together with collision coverage, and both are often referred to as physical damage coverage.
If the car is leased or financed, the leasing company or lender may require you to have physical injury coverage, even if state law doesn't require it. A good rule of thumb is that you should have collision insurance on your car until the cost exceeds 10% of the value of the vehicle. However, even so, you shouldn't abandon collision insurance if you can't pay out of pocket for the repair or replacement of your car after an accident because of your fault. For more information, see WalletHub's guide to collision insurance.
You need coverage that actually covers you, the kind that protects you from car accidents that exceed your budget. If your car doesn't have much cash value, it might not be worth having comprehensive or collision coverage. Whether you're covered by health insurance or not, medical payments coverage (MedPay) covers reasonable medical expenses for you, your passengers, or any member of your family related to a car accident, regardless of who is at fault. In some cases, you may not be able to choose between liability insurance only for liability and full coverage insurance.
With so many variables surrounding the types of car insurance available, it's easy to spend more money than your coverage is worth. Although it varies from state to state, the PIP generally offers immediate coverage up to the limit set by your car insurance and you would have to consume it before you have to resort to MedPay or your own health insurance policy. Most states require certain types of car insurance, such as liability, uninsured motorist protection, personal injury protection, or MedPay. If you have a million-dollar home, you could lose it in a lawsuit if your insurance coverage is insufficient.
Original equipment manufacturer (OEM) approval coverage ensures that the same parts that the manufacturer originally tested and used to build your vehicle are used on your car. You should consider buying comprehensive coverage if you can't afford to get your car repaired or replaced out of pocket in the worst case scenario. The six most common types of auto insurance are auto liability coverage, coverage for uninsured or underinsured drivers, comprehensive coverage, collision coverage, medical payments, and personal injury protection. Deciding between liability insurance only or full coverage can save you hundreds of dollars a year.
If you're a new or inexperienced driver, have a new car, a luxury car, or an expensive vehicle, you may want comprehensive and collision coverage to reduce financial risk.