And again, when you've paid off your loan or returned your leased car, you can drop the coverage. In deciding whether to buy comprehensive coverage if it isn't required, you'll want to weigh your ability to pay out of pocket if your car is stolen and you have to buy a new one or damaged and you're stuck with the repair bills.
You'll also want to consider how much your car is worth compared with the cost of covering it year after year. What it covers: Just because state laws require drivers to have liability coverage, that doesn't mean every driver does.
As of , an estimated Many other drivers have some insurance but not enough to cover the costs of a serious accident. That is where this type of coverage comes in. It can cover you and family members if you're injured or your car is damaged by an uninsured, underinsured, or hit-and-run driver. How much you need: Some states require drivers to carry uninsured motorist coverage UM.
Some also require underinsured motorist coverage UIM. You can also buy this coverage in some states that don't require it. For example, if you lack adequate health insurance or medical coverage through your car insurance policy, adding it could be worth it. When you're shopping for auto insurance, you may see some other, totally optional types of coverage. Those can include:. Whether you need any of those will depend on what other resources you have such as membership in an auto club and how much you could afford to pay out of pocket if you must.
An auto insurance policy is made up of multiple types of coverage, some of which your state or auto lender may require, while others are optional. Whether to buy more than the minimum required coverage and which optional types of coverage to consider will depend on the assets you need to protect as well as how much you can afford to pay. Your state's motor vehicle department website should explain its requirements and may offer other advice specific to your state. An independent insurance agent who is familiar with the laws in your state and can provide policy options from a number of different insurance companies could also be of help.
Insurance Information Institute. Consumers' Checkbook. Florida Highway Safety and Motor Vehicles. New York State.
Insurance Research Council. Maryland Insurance Administration. Accessed March 29, Car Insurance. Personal Finance. Career Advice. Your Privacy Rights. To change or withdraw your consent choices for Investopedia. But this average does not reflect what you will pay for coverage. Insurers determine your car insurance rate based on several factors, including the make and model of your car and your annual mileage, as well as personal factors such as your claims history, credit history, driving record, gender and marital status.
How We Make Money. Michael Evans. Written by. Michael Evans has worked in numerous industries, including education, finance, government, insurance and journalism. He began writing professionally while working for the world's …. Edited By Morgan Chelsea Lanier. Edited by. Morgan Chelsea Lanier. Morgan Chelsea Lanier has been an insurance editor for Bankrate since Using her eight years of experience in market research and data analysis, she works hard to understand ….
Share this page. Bankrate Logo Why you can trust Bankrate. We guide you throughout your search and help you understand your coverage options. We provide up-to-date, reliable market information to help you make confident decisions. We reduce industry jargon so you get the clearest form of information possible.
Bankrate Logo Editorial Integrity. Key Principles We value your trust. Bankrate Logo Insurance Disclosure. Read more From Michael. He began writing professionally while working for the world's first online mortgage brokerage in San Francisco, California. Michael has contributed to Bankrate since He and his family divide their time between residences in Northern California and Colombia. The flexibility of combined single limit liability means more financial protection than split limit coverage in many cases.
Combined single limit liability may cost more than split limits. If you want more protection, consider buying full coverage car insurance.
Full coverage isn't a specific type of policy, but refers to a combination of coverage types including liability insurance and comprehensive and collision coverage. In a word, yes: Almost all car insurance policies must include some liability coverage. Every state except Alaska, New Hampshire and Virginia requires all drivers to have liability insurance. Each state sets its own minimum coverage levels , and many require additional types of insurance see table below. These requirements are in place to protect drivers who aren't at fault in a wreck.
Liability insurance makes this possible. New Hampshire. Minimum limits if driver purchases car insurance, which is optional. New Jersey. New Mexico. New York. North Carolina. North Dakota. Rhode Island. South Carolina. South Dakota. Bodily injury liability insurance helps pay the costs described above for another person or people that are injured in a car accident where you're found liable.
This may include a driver or passengers in another car, pedestrians or unrelated passengers in your own car. This coverage does not pay for you or your family's medical expenses or lost income if you cause the car accident. But, it may help pay for your legal expenses if you're taken to court over an accident you caused. When choosing bodily injury liability coverage, state laws typically dictate a minimum liability coverage limit drivers must purchase.
It's a good idea to check your state's requirements and work with your insurance company to determine how much coverage is appropriate. You should also keep in mind that you may be able to buy more coverage by increasing your liability limits.
Lastly, keep in mind that if you accidentally injure someone and their medical expenses exceed your bodily injury liability coverage limits, you may have to pay out of pocket to cover the remaining costs. That's why it's important to consider how much bodily injury liability coverage is enough for your situation — and why you may want to purchase limits that are higher than your state's requirements. Bodily injury liability coverage is subject to a limit , which is the maximum amount your car insurance policy will pay toward a covered claim.
Bodily injury liability coverage generally has two coverage limits: a per-person limit and a per-accident limit. Per-person limit The per-person limit applies to each person injured in an accident. Per-accident limit The per-accident limit applies to each accident in which multiple people are injured.
Some states may also allow you to choose a combined single limit for bodily injury and property damage liability coverage. Personal umbrella insurance is a way to purchase extra liability coverage that goes above liability limits in another insurance policy.
That means if you cause an accident and reach your auto policy's liability limits, the umbrella policy would kick in to help pay the remaining covered costs.. A personal umbrella policy would help cover those additional costs, up to the policy's limit.
Liability coverage has two components: bodily injury liability and property damage liability.
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