A car insurance policy consists of several types of coverage, some of which are mandatory in most states, while others are optional.
The most common coverages are:
Bodily injury liability coverage. If you're involved in an accident that results in an injury to another driver or their passengers and you're at fault, this coverage will help pay any associated costs up to the limits on your policy. It is required in 49 states and the District of Columbia.1 (The exception is New Hampshire, which allows drivers to forgo insurance but "strongly recommends" that they buy it. However, there are circumstances that proof of insurance is required.)2
Property damage liability coverage. This covers any damage you cause to another driver's vehicle or other property, such as a neighbor's fence. It is also required in virtually every state.
Collision coverage. Collision insurance can cover damage to your vehicle in the event of an accident. It is optional in every state.
Comprehensive coverage. Also known as "other than collision," comprehensive covers damage to your vehicle from causes such as flooding, a fallen tree, or a fire. It also covers you if your car is stolen. Like collision coverage, it is optional.
Medical payments (MedPay)/personal injury protection (PIP). Mandatory in some states, MedPay or PIP covers medical bills and related costs if you or a passenger in your car are injured in an accident.
Uninsured or underinsured motorist coverage. If you're ever in an accident with someone who doesn't have car insurance or whose insurance isn't sufficient to cover the damage they have caused, this insurance can cover that shortfall. It is mandatory in some states.
