What is needed for adequate auto insurance coverage? (2025 Driver’s Guide)

Adequate auto insurance coverage requires liability insurance and additional options like collision and comprehensive. It shields you from unexpected financial burdens in the event of an accident.

While the range of options and rates available from auto insurance companies can feel overwhelming, understanding the five basic types of coverage will help you make informed decisions.

Knowing what types of coverage you need and how to find affordable auto insurance rates online will ease your search for auto insurance. Enter your ZIP code above to use our comparison tool and ensure you have what is needed for adequate auto insurance coverage.

Types of Auto Insurance

Knowing the types of auto insurance available is essential when selecting a policy. Each type provides coverage for different situations, ensuring protection in various scenarios. But which type of car insurance is best? Below are the common types of coverage to consider.

Liability Coverage

Liability coverage protects you if you’re legally responsible for injuries or damages caused to other people or their property in an accident. This coverage includes two main components: bodily injury and property damage.

Bodily injury liability pays for medical expenses, lost wages, and legal fees related to injuries sustained by others, while property damage liability covers repairs to other vehicles or structures. This coverage extends to you, relatives in your household, or anyone driving your car with permission. See our ranking of the best property damage liability auto insurance companies.

Collision Coverage

Collision auto insurance coverage helps pay for damage to your vehicle if it’s involved in a crash, whether you collide with another car or an object like a tree or guardrail.

It covers repairs or replacement costs minus your deductible. Collision insurance applies even if you’re at fault and typically applies only to the cars listed on your policy. This coverage is especially important if you’re financing or leasing your car, as lenders may require it.

Comprehensive Coverage

Comprehensive auto insurance coverage protects your vehicle from non-collision-related damage. This includes theft, vandalism, natural disasters, falling objects, fire, and even damage caused by animals.

Comprehensive insurance also helps cover repairs or replacement, minus the deductible, in events like break-ins or storm damage. It’s broader protection than collision coverage, but it’s often optional unless required by a lender.

Medical Payments Coverage

Medical payments coverage, or MedPay, helps cover medical and funeral expenses for you, your passengers, or family members if they are injured in a car accident, regardless of fault.

So, do you need medical payment coverage on auto insurance? Yes, you should consider it. It may cover hospital bills, surgeries, and other related costs and can help if you’re hit as a pedestrian. MedPay is typically optional but can provide essential financial protection if your health insurance falls short after an accident.

Uninsured/Underinsured Motorist Coverage

Uninsured and underinsured motorist coverage protects you if you’re in an accident caused by a driver with little or no insurance. Uninsured motorist coverage pays for your injuries and damages when the other driver has no insurance, while underinsured motorist coverage kicks in when the at-fault driver doesn’t have enough insurance to cover all your expenses.

This type of coverage is crucial in hit-and-run situations or areas where uninsured drivers are common.

Online insurance quotes should indicate mandatory coverages for your area, making it easier to understand what’s required.

Lenders and states require drivers to carry minimum amounts of certain types of insurance coverage. For example, the state of North Carolina requires that all drivers carry a minimum of $30,000 in bodily injury, $60,000 in total bodily injury, and $25,000 in property damage coverage.

Not all states and lenders have the same requirements, so check with your lender or your state’s minimum auto insurance requirements to ensure you have all the insurance you need.

If you’re shopping for insurance online, the insurers should be able to tell you what coverages the law says you must buy.

Factors That Determine the Cost of Your Insurance

When you ask for free auto insurance quotes or apply for coverage, insurance companies will ask for a good deal of information. They’ll use this information to determine the risk they would take by giving you auto insurance.

Your insurance premium will be higher or lower depending on how high or low your risk level is. See the table below to understand how much you can expect to pay with our top providers based on your selected coverage level.

Auto Insurance Monthly Rates by Provider & Coverage Level

Some factors that help determine your risk level are under your control, while others are not.

Factors considered by insurers include:

• Driving Record: Your previous record usually impacts your insurance premium the most. Insurers typically charge you more if you’ve been charged in a wreck or convicted of speeding and other driving offenses within the past three years.
• Neighborhood: Where you live can also affect how much you pay for insurance. Drivers in cities usually pay more than those in rural areas. Insurers consider an area’s vehicle density, the likelihood of accidents and claims, and the costs of repair rates.
• Your Automobile: The type of car you drive can also lower or raise your premium depending on its style, repair, and replacement costs, and how often its model is stolen. A sedan, for example, usually costs less to insure than a sports utility vehicle or sports car (Read More: Which cars have the lowest auto insurance premiums?).
• Usage of Automobile: The more you drive, the more likely you will pay for insurance. Insurers usually charge more for vehicles used daily than those used occasionally.

Being aware of these factors enables you to make strategic choices, such as improving your driving record or selecting a more affordable vehicle, which can reduce insurance costs.

Insurance Discounts

Always ask about discounts when shopping for auto insurance online. The different discounts that insurers offer can be a good comparison point to help you decide which policy is right for you.

The discounts offered by different insurers vary, but some of the most popular include:

• Safe Driver Auto Insurance Discount: Awarded for a good driving record with few or no violations.
• Multi-Policy Auto Insurance Discount: This discount is for drivers who buy policies for multiple vehicles or purchase other types of insurance, such as homeowners or renters, from the company.
• Good Student Auto Insurance Discount: Awarded to responsible students with good grades.
• Paid-in-Full Auto Insurance Discount: Granted when a premium is paid upfront instead of in monthly installments.
• Safety Features Auto Insurance Discount: This discount is given for safety devices such as airbags, daytime running lights, and anti-lock brakes.