What Does Auto Insurance Cover? Liability, Collision, Comprehensive, and the Rest

An auto policy is not one coverage — it is five or six stapled together, each paying a different person for a different kind of loss. What auto insurance covers depends entirely on which of those pieces you bought, and the drivers who discover a missing piece after a crash are the ones who bought on price alone. Here is each coverage, what it actually pays, and how to read the numbers.

Liability: the coverage every state makes you buy

Liability pays the other people when you cause a crash — their medical bills under bodily injury (BI), their car and property under property damage (PD). It pays nothing to you. Limits are written as three numbers, and reading them is a core skill:

First number: $100,000 max bodily injury per person you injure
Second number: $300,000 max bodily injury per accident, all injured people
Third number: $100,000 max property damage per accident
You rear-end a car carrying three people, $120,000 in medical bills each
Policy pays $100,000 per person cap -> $300,000; you owe the remaining $60,000

Collision and comprehensive: coverage for your own car

Collision pays to repair or replace your car after a crash with another vehicle or object, regardless of fault, minus your deductible. Comprehensive pays for the non-crash losses — theft, hail, flood, fire, vandalism, falling trees, animal strikes. Both settle at the car's actual cash value, which is why they stop being worth buying as the car ages: when the car is worth $3,000 and the two coverages plus a $500 deductible cost $600 a year, you are insuring $2,500 of recoverable value.

Uninsured and underinsured motorist coverage

Roughly one in seven U.S. drivers carries no insurance, and many more carry only state minimums. Uninsured motorist (UM) pays your injuries when the at-fault driver has no policy; underinsured motorist (UIM) pays when their limit runs out before your bills do. Where it is optional, it is usually cheap — and it is the only coverage on the page that protects you from someone else's decision to skip insurance.

Medical payments and personal injury protection

Medical payments (MedPay) covers medical bills for you and your passengers after a crash, regardless of fault, typically $1,000 to $10,000. Personal injury protection (PIP) is the broader no-fault version required in a dozen states, adding lost wages and rehabilitation. If your health plan has a high deductible, PIP or MedPay fills the gap a crash would otherwise blow through it.

State minimums: legal, and nowhere near enough

The add-ons worth pricing

• Rental reimbursement: $30 to $50 a day while your car is in the shop, usually $20 to $40 a year.
• Roadside assistance: towing and lockouts, cheaper on the policy than most motor clubs.
• Gap insurance: pays the difference between the car's ACV and your loan balance — essential in the first years of a long loan.
• New car replacement: pays for a brand-new car rather than depreciated ACV if a recent-model car is totaled.