Auto Insurance: What Should You Have in Place?
Auto insurance is more than proof-of-insurance on your phone. A useful review means knowing your liability limits, what protects your own vehicle, how deductibles work, who is listed as a driver and what happens if another driver has little or no insurance.
This page provides general educational information. Auto-insurance requirements, available coverages and policy terms vary by state, insurer, vehicle and household. Review your current policy and applicable state requirements for the details that apply to you.
Know these eight things.
They tell you much more than the monthly premium.
- Your liability limits
- Whether you carry collision coverage
- Whether you carry comprehensive coverage
- Your deductibles
- Your uninsured or underinsured motorist coverage
- Any medical payments or PIP coverage that applies
- Who is listed or rated as a household driver
- What the lender or lease agreement requires
Auto insurance protects more than the car.
A vehicle can create financial exposure through injuries, property damage, theft, weather damage, collisions and other losses. That is why a policy may contain several different types of coverage.
The important question is not simply whether you are insured. It is which losses the policy addresses, what limits apply and how much of the cost you would still be responsible for.
Liability insurance generally addresses certain losses you cause to others. Collision and comprehensive coverage generally focus on eligible damage to the insured vehicle itself.
Know what each part of the policy is intended to do.
The coverages available to you depend on the state and insurer, but these are some of the major areas worth reviewing.
Bodily Injury Liability
May help address eligible injury-related costs when you are legally responsible for an auto accident, subject to the policy limits and terms.
Property Damage Liability
May help address eligible damage you cause to another person's vehicle or other property.
Collision
May help pay for eligible damage to your insured vehicle from a collision, subject to the deductible and policy terms.
Comprehensive
May help with certain non-collision losses such as theft, vandalism, weather events or other covered causes of loss.
State minimum coverage and enough protection for your household are not necessarily the same question.
States can require minimum levels or types of auto-insurance coverage, but minimum requirements are not a personalized recommendation for how much financial protection a household should carry.
Read the numbers on the declarations page.
Know the bodily-injury and property-damage liability limits that apply to your policy.
If an eligible claim exceeds a policy limit, the policy does not simply become unlimited. That is why liability limits deserve a deliberate review.
Collision and comprehensive protect against different kinds of loss.
They are commonly discussed together, but they are not the same coverage.
Collision Coverage
Collision coverage may help repair or replace the insured vehicle after certain crashes or impacts, subject to the deductible, policy limit and other terms.
Comprehensive Coverage
Comprehensive coverage may address certain losses that are not ordinary vehicle collisions, such as theft, vandalism, falling objects, weather or animal-related damage, depending on the policy.
What happens if the person who hits you has too little insurance—or none?
Uninsured and underinsured motorist coverage can help address certain losses when another responsible driver does not have enough qualifying insurance, depending on state law and the policy.
Check both the coverage and the limits.
Do not assume this protection is automatically included at the same level as your liability coverage.
Availability, required offerings and claim rules can vary by state. Review your declarations page and state-specific policy documents.
Medical payments and PIP rules depend heavily on the state and policy.
Some auto policies include or offer medical payments coverage, personal injury protection or other benefits tied to injuries from an automobile accident.
Medical Payments Coverage
May help with certain eligible medical expenses following an auto accident, subject to the policy, limits and applicable state rules.
Personal Injury Protection
PIP may provide broader accident-related benefits in states where it applies, but the covered expenses, limits and requirements vary.
A higher deductible can lower the premium—but increases what you may need to pay after a covered loss.
Collision and comprehensive coverage commonly have deductibles. Your emergency savings should be able to absorb the deductible you choose.
Know the exact amount.
Check the collision deductible and comprehensive deductible separately.
They may not be the same.
Make sure the deductible is realistic.
A deductible only helps lower the premium if you could actually pay it when a claim happens.
Include that amount in your broader emergency-fund planning.
Small policy add-ons can matter a lot when something goes wrong.
Availability and terms vary, but these are common areas worth checking.
Rental Reimbursement
May help with eligible temporary transportation costs while a covered vehicle is being repaired after a qualifying loss.
Roadside Assistance
May provide towing, jump-starts, lockout assistance or other roadside services under the program's terms.
Loan or Lease Gap Coverage
May help address certain differences between an outstanding loan or lease balance and the vehicle's covered settlement after a total loss.
The right vehicle can still be on the wrong policy if the driver information is outdated.
Household drivers, regular vehicle use and where a vehicle is kept can affect underwriting and coverage. Keep the insurer informed when circumstances change.
New Driver
A newly licensed household member can trigger a policy review and possible premium change.
Driver Leaves Household
Moving, divorce, college, military service or another household change may affect who should be listed.
Vehicle Use Changes
A change in commute, annual mileage or business use may affect how the insurer views the vehicle's use.
Your lender or leasing company may require more coverage than state minimums.
When someone else has a financial interest in the vehicle, the loan or lease agreement may require specified physical-damage coverage and other protections.
Check These Requirements
Do not remove coverage before the loan or lease is settled.
If you sell, trade or pay off the vehicle, confirm when the lender's interest ends and when policy changes should take effect.
Review Vehicle Records →The best time to know your claims process is before you are standing beside a damaged car.
Keep important insurance and vehicle information accessible without storing unnecessary sensitive information in the car.
Keep Proof of Insurance Available
Know where the current insurance card or accepted digital proof can be accessed.
Know the Claims Number
Save the insurer's claim-reporting information somewhere accessible outside the vehicle as well.
Document the Scene Safely
When it is safe and appropriate, photos and basic information may help document what happened.
Auto coverage should change when the vehicle or household changes.
Buying a Vehicle
Review limits, physical-damage coverage, lender requirements and deductibles before taking ownership.
Selling a Vehicle
Confirm when the vehicle should be removed and whether other household coverage changes.
Adding a Driver
A new licensed driver can materially change household insurance needs and premium.
Moving
A new address, garaging location, commute or state can affect coverage requirements and pricing.
Vehicles change when life changes.
Buying a Vehicle
Review insurance before purchase so coverage can be ready when ownership begins.
Getting Married
Combining households, drivers and vehicles can change policy structure and coverage needs.
Moving
A new address or state can change insurance requirements, rates and garaging information.
Having a Child
Vehicle choices, household finances and transportation responsibilities may change.
Connect auto insurance with your vehicle records and emergency planning.
Vehicle Readiness Checklist
Review registration, insurance, maintenance records, roadside support and emergency supplies.
Open Vehicle Checklist →Vehicles & Transportation
Review title or loan records, registration, insurance, service history and other important vehicle information.
Review Vehicle Records →Emergency Fund Planner
Make sure your savings can realistically absorb an insurance deductible or unexpected transportation expense.
Plan Emergency Savings →Use current state requirements and your actual policy when details matter.
Auto-insurance requirements and coverage rules vary by state. These resources provide useful consumer and vehicle-safety information.
Consumer information about auto insurance and links to state insurance regulators.
Visit NAIC →State motor-vehicle resources, registration information and links to government services.
Visit USA.gov →Federal vehicle-safety information, recalls and transportation safety resources.
Visit NHTSA →A few coverage terms are especially important to understand.
What does liability auto insurance cover?
Liability coverage may help pay eligible costs when you are legally responsible for injuries to another person or damage to another person's property, subject to the policy's limits and terms.
What is the difference between collision and comprehensive coverage?
Collision coverage generally applies to certain damage to your insured vehicle caused by collisions or impacts. Comprehensive coverage generally addresses certain non-collision losses such as theft, vandalism or weather damage. Exact coverage depends on the policy.
What is uninsured motorist coverage?
Uninsured motorist coverage may provide protection for certain losses when an at-fault driver has no qualifying insurance. Underinsured motorist coverage may apply when the responsible driver's limits are insufficient. Availability and rules vary by state.
Do I need collision and comprehensive coverage on a financed car?
A lender or leasing company may require physical-damage coverage while it has a financial interest in the vehicle. Review the loan or lease agreement and insurance requirements.
When should I review my auto insurance?
Review coverage when you buy or sell a vehicle, add or remove a driver, move, change vehicle use, refinance or pay off a loan, or experience another significant household change.
Open your declarations page and look beyond the premium.
Start with liability limits, collision and comprehensive coverage, deductibles and uninsured or underinsured motorist protection. Then make sure the listed vehicles and household drivers are still accurate.