What Are the Types of Car Insurance?

A car insurance policy can offer one or two coverage types, or it can offer several. And there are also different types of policies, including classic car insurance and business auto policies. Most drivers carry a standard personal auto insurance policy.

A standard auto insurance policy uses liability insurance as its core coverage type. Liability refers to our financial responsibility to others and you’ll find two kinds of liability insurance on a standard policy.

– Bodily injury liability: Your bodily injury liability coverage pays for auto-related injuries caused to others.
– Property damage liability: Similarly, property damage liability coverage pays for auto-related damage caused to the property of others.

In some jurisdictions, auto policies can also include medical coverage for the driver and passengers. This coverage can take different forms and targets auto-related injuries. 

Auto policies also offer physical damage insurance, which again provides two types of coverage:

– Collision: Your collision coverage pays for damage caused to your vehicle due to contact with another vehicle or a fixed object. Collision coverage also pays for damage due to rollover.
– Comprehensive: Sometimes called “other than collision” insurance, comprehensive coverage pays for physical damage (or loss) caused by reasons other than collision. Covered risks include theft, vandalism, fire, floods, falling or flying objects, and glass damage.

While not required by law, physical damage coverage is often required by lenders or leasing companies.

Coverage limits
The various types of insurance on your auto policy are each subject to coverage limits. Some limits are clearly defined, such as liability limits or medical coverage (where available). 

However, physical damage coverage is limited by the value of the vehicle on a standard auto policy. Because the limit tracks market value, your insurance coverage limit isn’t defined by a specific number. If or when you have a claim, your insurer determines and compares the actual cash value for your vehicle to the cost of the needed repairs.

Other types of auto insurance
Most auto policies offer ways to customize your coverage, possibly including roadside assistance or specialized coverage for rideshare drivers. 

But while customizable, a standard auto insurance policy isn’t a perfect fit for every situation. Owners of classic cars or collectibles may be better served with a classic car insurance policy and certain business use cases may require a commercial auto insurance policy.

Customize your policy to meet your needs
Your insurance policy isn’t fixed in stone. If you need more features or want to shift coverage to other areas, there are several ways to personalize your policy to meet your specific needs.

Just reach out to your agent or broker to schedule a policy review.