What auto insurance covers
An auto policy is a bundle of separate coverages, each with its own limit and price. Together they pay for injuries and damage you cause to other people, damage to your own vehicle, and medical costs for you and your passengers. According to the Insurance Information Institute (Triple-I), every state except New Hampshire requires drivers to carry liability insurance to drive legally, and New Hampshire still expects drivers to show they can pay for an at-fault accident. Collision and comprehensive are optional under state law, but a lender or leasing company will usually require them until the car is paid off.
Main coverage types
- Bodily injury liability pays for injuries or deaths you cause to others, plus your legal defense.
- Property damage liability pays for damage you cause to another vehicle or to property such as a fence, building or utility pole.
- Collision pays to repair or replace your car after a crash with another vehicle or object, or a rollover, minus your deductible.
- Comprehensive covers theft and damage from causes other than a collision, such as fire, hail, flood, falling objects or hitting an animal.
- Medical payments or personal injury protection (PIP) covers medical bills for you and your passengers; PIP can also pay lost wages.
- Uninsured/underinsured motorist protects you when the at-fault driver has no insurance or too little.
Liability limits are written as three numbers. California, for example, raised its minimums to 30/60/15 starting January 1, 2025: $30,000 for injury to one person, $60,000 for all injuries in one accident and $15,000 for property damage. A minimum is a legal floor, not a recommendation.
No-fault and at-fault states
Triple-I reports that twelve states and Puerto Rico have no-fault auto laws. There, your own PIP coverage pays your medical costs first, no matter who caused the crash, and the right to sue the other driver is limited unless the injury passes a threshold. Florida, Michigan, New Jersey, New York and Pennsylvania use a verbal (severity) threshold; Hawaii, Kansas, Kentucky, Massachusetts, Minnesota, North Dakota and Utah use a dollar threshold. New Jersey, Pennsylvania and Kentucky let drivers choose between no-fault and traditional tort options. In other states the at-fault driver's liability insurance pays the other party's losses. Uninsured motorist coverage is mandatory in about 20 jurisdictions.
What is usually excluded
Personal auto policies generally exclude ride-hailing or delivery work without a proper endorsement, intentional damage, racing, wear and tear, mechanical breakdown, and personal belongings stolen from the car (those usually fall under a homeowners or renters policy). Letting an excluded driver use the car can lead to a denied claim. Rental reimbursement and gap coverage are add-ons, not standard parts of the policy.
What drives the price
Each coverage is priced separately, so your premium reflects the limits and deductibles you pick as well as your risk profile. Common rating factors include driving record and claims history, annual mileage and use of the car, the vehicle's repair cost and theft rate, where it is garaged, the ages and experience of household drivers and, where allowed, credit-based insurance scores. Some states restrict factors such as credit or gender, so the same driver can be priced very differently across state lines. A higher deductible lowers the premium but raises what you pay after a claim.
How to choose a policy
Pick liability limits high enough to protect your savings and future income, not just the state minimum. Keep collision and comprehensive on a financed or valuable car; on an older car, compare their annual cost with what you could actually collect. Match uninsured motorist limits to your liability limits, review rental and roadside add-ons, and ask about bundling, safe-driver and telematics discounts. Check the insurer's financial strength rating and its complaint record on the NAIC website. To estimate a budget, try our auto insurance calculator.
How claims work
After a crash, make sure everyone is safe, call the police if anyone is hurt or a report is required, exchange insurance details and take photos. Notify your insurer promptly. An adjuster reviews the damage, applies your state's fault rules and pays for repairs or, for a total loss, the car's actual cash value minus your deductible. If the other driver was at fault, your insurer may pay you first and recover the money through subrogation, which can also return your deductible.
Polis Re helps you compare auto insurers and coverage options side by side and request quotes in one place. Policies are issued by licensed insurers and placed through licensed producers in your state.
