What Type of Auto Insurance Do I Need?

Figuring out what type of auto insurance you need—and which car insurance coverages are right for your situation—can sometimes feel… a bit like a guessing game. And the insurance industry uses a lot of “insurance-speak,” which can make things even more confusing.

But in this guide, you’ll get clarity around auto insurance coverage types, the lingo used, and things to consider when buying auto insurance that’s right for you.

Here’s what we’ll cover:

Why auto insurance is so important
What coverages might be right for you
The types of auto coverages available (and what the industry terms mean)
Common types of add-on auto insurance coverages
What to consider when choosing a deductible
Factors that go into the cost of auto insurance
How to get smarter, faster car insurance at an affordable price

Let’s jump right in!

Why Is Auto Insurance Important?

One of the main reasons auto insurance is important is pretty basic: it’s legally required in the vast majority of states.

But beyond insurance simply being legally required to drive, it also works to protect you financially in the case of an accident. That’s why finding the right insurance coverage (and the right car insurance company) is so important.

Car accidents can get expensive, especially if there are injuries or property damage involved. Auto insurance can protect you financially in the case of covered incidents and losses. Yes, auto insurance is an added expense in your personal budget, but it’s one that is there to help protect you in the long run.

Hi, we’re Clearcover. 👋 And we’ve developed car insurance that’s hassle-free, fast, and easy to understand (without all the confusing insurance-speak). Learn how we can help.

What Type of Coverage Is Right for You?

What types of auto coverages are right for your situation? And what does each coverage actually, well, cover ? Here’s where things can get a little confusing when you’re shopping for auto insurance.

When determining what type of coverages are right for you:

The amount of car insurance coverage that’s legally required in your state
Your financial risk tolerance level
The financial assets you own that you’d like to protect

While many drivers simply seek out “full coverage car insurance,” that type of insurance doesn’t actually exist. Read the article Do You Need Full Coverage Insurance?, to learn more.

Need help determining what’s right for you? Chat with an insurance agent or check out our coverage wizard to get a customized fit for your car insurance.

Next, we’ll go over individual coverage types and what they mean for your auto insurance policy.

Liability Coverage

Liability coverage is broken down into two parts: bodily injury liability and property damage liability. These coverages can help pay for financial obligations in an accident where you’re found at fault.

Bodily injury coverage covers the cost of an injury caused to another person while driving.
Property damage coverage covers the cost of damages to another person’s vehicle while driving.

Liability car insurance is required in most states. Your state will set the required minimum coverage amount that you have to carry in order to legally drive.

It’s important to note that liability coverage isn’t designed to cover your own injuries or vehicle damage from an accident. (But we’ll discuss the coverages that are designed to protect you and your vehicle next!)

FAQ: How much liability insurance do I need? Read on to find out.
FAQ: I drive for a rideshare company. How do I know if I need rideshare insurance?

Collision Coverage

So what is collision insurance? Collision coverage is designed to protect you if your vehicle is damaged in an accident. It can cover you whether your vehicle is damaged by colliding with another vehicle or a stationary object.

For example, if you swerve to avoid large debris on the road and hit a tree and damage your car, collision coverage can help get your vehicle repaired if it’s a covered incident.

While collision coverage is not often required by state law, it may be required by your lender or car lease agreement. And even when it’s not required, it can help pay to repair or replace your vehicle if it’s totaled.

Comprehensive Coverage

Much like collision coverage, comprehensive car insurance isn’t required by state law but could be required by your car loan or lease. It is designed to help repair or replace your vehicle in a variety of instances, including weather-related car damages, like tornadoes or wildfires, damage caused by animals, and more.

Let’s say your car is parked overnight at your apartment, and (although unlikely) a scene from the movie Jumanji ensues—and your car is completely wrecked in a wildlife stampede. Usually, this kind of instance would be covered under your comprehensive coverage (unless wild stampedes are specifically excluded from your car insurance policy).

Even if it’s not required by a lender or lease agreement, comprehensive coverage can also help to pay to repair or replace your vehicle if it’s totaled.

Personal Injury Protection

Personal injury protection coverage—also known as no-fault insurance, PIP, or first-party benefits—is a type of car insurance that can be used whether you’re found at-fault for a car accident or not.

You’re required to carry this coverage in “no-fault states” (states where each driver in an accident is required to file a car insurance claim with their insurer). It can help pay for medical bills, lost wages, and funeral expenses caused by a covered incident, for both you and your passengers.

Uninsured and Underinsured Motorist Coverage

Did you know it’s estimated that almost 13% of drivers on the road are completely uninsured? (1) Next time you’re out driving, just imagine that at least one out of every 10 cars that pass by is possibly driven by an uninsured driver. Yikes!

Uninsured and underinsured motorist coverage is designed to protect you in the instance you get in an accident with one of those uninsured (or underinsured) drivers. It’s required in some states and optional in others, and your state will set the minimum amount of coverage you’re required to carry.

Medical Payments Coverage

Medical payments coverage is an optional coverage that may be available as an alternative to PIP in states that do not have no-fault insurance laws. Similar to PIP, it can help pay for medical and funeral expenses for the driving policyholder and passengers, no matter who’s found at-fault.

Sometimes there’s an overlap between what this coverage and a health insurance policy covers, so you should check with your insurance agent to make sure you’ve got the right coverages in place.

Optional Coverage Plans

Now that we’ve covered the types of auto insurance that are considered the building blocks of a standard policy, let’s do a quick overview of the types of coverages that are available as optional “add-ons.” Just a heads up: Some of these coverages are available at Clearcover and some aren’t—we’ll make sure to let you know if we don’t have them available.

GAP Insurance

GAP auto coverage (also known as guaranteed asset protection) is designed to cover you from additional financial loss if you owe more on your vehicle loan than your car is currently worth.

The worth of a vehicle depreciates over time, so if your car is totaled and your insurance company pays out its actual cash value, GAP insurance can “cover the gap” between what you would owe on your loan and the current value of your car. This coverage may be required by some lenders or lease agreements.

Clearcover does not currently offer GAP auto coverage.

Alternate Transportation Coverage

Alternate transportation coverage, sometimes called rental reimbursement insurance, can help pay for a rental car, bus fares, or rideshare costs if your vehicle is damaged or totaled in a covered incident.

And if you’re a Clearcover customer and have this coverage, you can choose how to use these funds—and can even get cash or Uber credits if that’s more your style.

Roadside Assistance Coverage

Roadside Assistance Coverage is an optional add-on that can really come in handy at a moment’s notice. It does exactly what it sounds like: provides you assistance for covered incidents while you’re out on the road. Roadside assistance can help take some stress (and extra unexpected costs) out of annoying vehicle hiccups like breakdowns, locking your keys in the car, and dead batteries.

Have the Clearcover mobile app? If you have this coverage through Clearcover, you can request roadside assistance through your app in just a couple of taps. (And get notifications that help is on the way!)

Mechanical Breakdown Insurance

Clearcover doesn’t offer this type of coverage, but this add-on coverage provided by some car insurance companies allows you to select a licensed mechanic of your choice if your vehicle needs repairs after a covered incident. It also can cover some types of mechanical breakdowns not caused by accidents—like break issues, transmission problems, electrical system issues, and more.

Pay-Per-Mile Coverage

Pay-per-mile coverage, also called usage-based insurance, uses a GPS tracker in your car that’s issued by your insurance company to monitor your mileage. You only pay for the miles you drive.

Currently, this type of coverage isn’t available through Clearcover. However, here’s the kicker: we use smart technology to make insurance faster, easier, and—well—smarter, so you don’t need a GPS tracker to get an affordable car insurance rate.

Umbrella Insurance

Umbrella insurance adds some additional financial protection. It’s a separate policy that can help pay for financial losses over and above the auto insurance coverages and limits that you’ve selected. Umbrella coverage isn’t currently available through Clearcover.

Glass Coverage

This is an add-on auto coverage that can help if you have to replace a whole windshield or window in your vehicle. While Clearcover doesn’t offer add-on glass coverage (because comprehensive and collision coverages include glass replacement and are usually sufficient for most drivers), some insurers offer this coverage with no additional deductible requirement.

Classic Car Insurance

Have an antique or classic car in your life? This insurance coverage is designed specifically to protect that investment. It’s not available through Clearcover currently, but certain insurance companies offer it if you need it.

How to Choose Between High and Low Deductibles

When you make your car insurance policy coverage selections, you get to choose the deductible amount that best fits your financial situation.

Your car insurance deductible is the amount you’re responsible for paying out of pocket per accident when you need to use your collision, comprehensive, or uninsured motorist property damage coverages. (In some states, personal injury protection coverage—or PIP—may also require a deductible.)

Whether you choose a high or low deductible is up to you, but it does impact the premiums you pay for your car insurance. Choosing a higher deductible usually means you’ll have lower premiums, while a lower deductible means you’ll pay a bit more in premiums each month.

When Should You Choose a Low Deductible Plan?

Every driver’s needs are unique, so it’s important to consider what you are comfortable paying out of pocket in the case of an accident. Many drivers who choose a low deductible plan prefer the routine of paying higher monthly premiums each month over coming up with a larger out-of-pocket amount quickly after an accident.

When Should You Choose a High Deductible Plan?

Drivers who choose a higher deductible prefer having lower monthly premium costs and are usually comfortable with paying a larger sum out of pocket in the instance of an accident.

If you’re curious what type of deductible might be best for your situation, read Everything You Need to Know About Car Insurance Deductibles for a deeper dive.

You can also chat with an experienced insurance agent— their expertise can go a long way in helping you make the selection that’s right for you.

What Is the Cost of Auto Insurance?

Once you’ve decided on the type of auto insurance coverage you need, you’re probably wondering: How much is this type of car insurance going to cost?

Your insurance policy (and costs) are unique to you, so the best way to know what your car insurance will cost is to get a car insurance quote for the specific types of coverages you’d like to have.

There are a few factors that insurance companies may use to determine what your car insurance costs will be, including:*

The types of coverages you select (and coverage amounts)
Your deductible amount
The type of vehicle you drive
Your driving history
How much you drive

*Important note: Insurance laws vary by state. The factors above are included as examples for educational purposes. Connect with your insurer or insurance agent directly for specifics on how your unique premium costs are calculated.

How Do You Get Car Insurance?

The most difficult part of getting car insurance is figuring out the amount of coverage and coverage types that are the best fit for your situation. After that, things get easier (especially if you’re working with Clearcover).

To get car insurance, follow the simple steps below. (If you’re a new driver, check out How to Get Car Insurance for the First Time for more details.)

1) Collect Information

Gather the details you’ll need to get accurate car insurance quotes, like your Vehicle Identification Number (VIN), make and model, and basic information (think your address and driver's license number).

2) Figure Out Your Coverage Needs

Every state has different laws around car insurance requirements. You’ll first need to determine the minimum coverages you’ll need to carry to drive legally in your state (Clearcover does this automatically for you when you get a quote.)

Next, you’ll need to decide what your coverage needs are. Are you required to carry comprehensive collision coverages by your car lease? Do you prefer to add on uninsured and underinsured motorist coverages if they’re not required by your state? Think through your preferences during this step.

3) Compare Policies

Once you’ve decided on the coverages you’d like to have on your auto insurance policy, it’s time to shop around. In general, it’s a good idea to get car insurance quotes from multiple insurance companies.

Make sure to compare apples to apples: Reviewing quotes for the same coverage types and amounts from different insurers can help you understand what company might have the best price. Check out How to Shop for Car Insurance to learn more.

4) Sign Up with Your New Insurance Provider (And Cancel Your Old One)

Once you’ve selected the insurance company you’d like to buy your policy from, go ahead and sign up! Purchase your coverages, cancel your old policy, and print your new insurance card. (With Clearcover, your insurance card is always on-hand in our award-winning app—no printing needed.)

Trouble Knowing What Type of Auto Insurance You Need? Clearcover Makes It Easy.

To sum it up, the type of auto insurance you need will be unique to you.

But no matter what your insurance needs are, car insurance shouldn’t be hard to understand, expensive, or difficult to get.

When you sign up with Clearcover, you’ll have everything you need to understand your policy, file fast claims, and pay your premiums, all at your fingertips in our easy-to-use app.

And after an accident—you know, when you need us most—certain eligible claims can be processed and paid in as little as 7 minutes. (Yep, you read that right. That’s our current record. And it’s one of the fastest in the insurance industry.)

When you sign up with Clearcover, you’ll get the power of super-fast technology to make your car insurance simpler, more affordable, and easier to understand. Check your price today.