A Complete Guide on What Does Car Insurance Covers?

A Complete Guide on What Does Car Insurance Covers?

Car insurance policies can include several types of coverage. To know exactly what you need to choose, you must know about the various options available. This article is targeted towards the different forms of coverage so that you have a clear idea of the policy. The policy may cover you and the people listed in the policy like your family members, passengers, victim, or more. So, let’s see what does car insurance covers?


What Does Car Insurance Cover?

Based on the coverage you choose you will understand what does car insurance covers. There is basic, extended, and premium coverage that has further sub-listed categories coverages.



Let’s get into the basic coverage that will protect you and your fellow passengers along within your car.

Read Also: How Much Car Insurance Do You Need?

The basic coverage has further three types. They are liability, collision, and comprehensive coverage.


#1: Liability

Liability coverage doesn’t focus on protecting you or your car rather it focuses on protecting your wallet. Suppose you are in an accident and it’s your fault. Now, liability insurance will cover third-party costs that will include repair and medical costs of others involved in the accident.

Now, the main question arises that how much liability insurance is best for you? We certainly believe that you need a lot of liability insurance. Even if it’s not mandatory in your state, you must select liability insurance with coverage of at least $500,000. It must include both bodily injury and property damage. Without liability coverage, you are at greater risk financially that can potentially harm your future.


#2: Collision

Sometimes you just don’t realize and the accident happens. You are driving and a foreign thought strikes you which leads to a stream of many more thoughts. Consecutively resulting in an accident. In such instances, collision coverage comes to your rescue. It pays for the repair or replacement of your car if you collide with a vehicle or object.

There is a difference between liability coverage and collision coverage. Liability only provides benefits if another driver is at fault while collision considers both the situations. That’s the reason why 70% of drivers purchase collision coverage.


#3: Comprehensive

Do you remember those instances when a sudden hail storm led to huge destruction and damaged cars?  Haven’t you heard of incidents where people park their cars only to find that their car has vanished? With comprehensive coverage, you will cover all that. Whether it’s a natural disaster or theft or even a branch of a tree falling on your car, it will pay to replace or repair your car.




With all your basic insurance needs covered, its time to add an extra layer of protection. There are plenty of options in the market for extended car insurance coverage.


#1: Personal Injury Protection

This is one coverage that is mandatory in over 15 states. It is similar to medical expenses coverage but there the coverage limit is high and requires a higher premium. Generally, personal injury protection comes with a deductible. It coves funeral costs, occupational therapy, child care, a percentage of lost wages, and a lot more. This may vary between different states. In most cases, you will get non-taxable coverage that is limited to the threshold set for your insurance.


#2: Medical Expenses Coverage

Whether you have insured yourself with health insurance or not you can still take advantage of medical expenses coverage. It will cover reasonable medical expenses for you. Also, it includes benefits for the passengers and family members associated with a car accident.


#3: UM and UIM

If we go by the report of the Insurance Research Council then one in every eight motorists drives uninsured. If you choose uninsured motorist coverage then it will pay for your medical expenses. This only applies if you have hit and run or you are uninsured. Remember it won’t cover the damages to your car.

Just imagine that you are hit by a driver whose insurance doesn’t provide enough coverage.

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It means coverage falls below your state’s minimum requirement. Underinsured Motorist Insurance will provide coverage in this case.




Premium coverage comes with all the interesting benefits. But yes you have to pay a higher premium amount for it. Here, you can see a few premium car insurance coverages that you can add to cover more stuff.


#1: Rental Reimbursement

If you meet with a car accident and you don’t own a spare car then what are you going to do? Who is going to pick up your kids from school or take you to your work? You will need another car and that’s when rental reimbursement makes all the difference. It will cover the cost of a rental car for a specific period of time. So you can still travel while your car is still in the repair stage.


#2: Mechanical Breakdown

If you visit the same mechanic for repairing your car then you may be tempted to sign up for mechanical breakdown insurance. So it gives you the freedom to choose your own mechanic who repairs your car in case of an accident. We suggest you not go for this coverage and save money.


#3: Glass Coverage

In case, you live nearby a place like a golf course then you will find this coverage important.

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It will provide glass coverage that means the cost of repairing the glass of your car is part of your insurance. There are some companies that offer this coverage with no deductible so you have to look into terms and conditions for it.


Final Words

If we talk about car insurance then it covers a lot of things. It depends on you, what type of coverage you are looking for. Also, the premium plays a major role in deciding so. If you cannot afford car insurance with a high premium there is no point shortlisting the types of coverage you wish to add to your policy. You must choose an insurance agent that gives you a good combination of all the coverages. An expert can guide you in choosing the best car insurance. Some of the best car insurance companies in the USA are State Farm, Geico, etc.

We hope this article clears your doubts about what does car insurance covers. If you still want to ask anything then add your questions to the comment section. We will try and reply to you as soon as possible.