Auto insurance is required in almost every state — but most drivers don't fully understand what their policy covers until they're standing on the side of the road after an accident.
Coverage Types at a Glance
🚗 Liability — Bodily Injury
Pays for injuries to others when you're at fault
Required in all states
🔧 Liability — Property Damage
Pays for damage to others' property when you're at fault
Required in all states
💥 Collision
Pays to repair your car after an accident
Optional (required if financed)
🌪️ Comprehensive
Theft, weather, fire, animals, non-collision damage
Optional (required if financed)
🚶 Uninsured Motorist
Covers you when the at-fault driver has no insurance
Required in most states
🏥 Medical Payments (MedPay)
Your medical bills regardless of fault
Optional in most states
Choosing the Right Deductible
Your deductible is the amount you pay out-of-pocket before insurance kicks in. A higher deductible lowers your premium but increases your financial exposure after a claim.
- $250-$500 deductible: Higher premium, lower out-of-pocket after a claim. Best if you don't have a solid emergency fund.
- $1,000+ deductible: Lower premium, higher out-of-pocket. Best if you have savings and want to keep premiums down.
How Much Liability Coverage Do You Actually Need?
State minimums are usually far too low. A serious accident can easily generate $500K or more in medical bills and legal fees. Most financial advisors recommend at least 100/300/100 ($100K bodily injury per person / $300K per accident / $100K property damage).