The Basics of Car Insurance

Car insurance protects you, your family, and your assets. The typical policy offers many coverage types, limits, and deductibles. A good car insurance agent will explain these elements and can help you select the coverage that best fits your needs and budget.

Essential coverages include bodily injury and property damage liability. Both typically have per-person and per-accident limit amounts.

Liability for Physical Injury

In the unfortunate event of a car accident, the bodily injury liability coverage provided by your auto insurance will cover any medical expenses that may arise for the injured parties. It includes their medical bills and, in some cases, future lost wages if the injuries are permanent.

Some states allow drivers to self-insure by demonstrating significant savings, but most mandate that drivers carry minimum liability coverage. Getting as much liability coverage as you can comfortably afford to protect your assets is wise.

Bodily injury policies typically have two separate limits: a per-person limit and a per-accident limit, often shown as a series of numbers like 25/50/10. These are the maximum amount your insurer will pay for bodily injury claims involving one person or multiple people injured in a single accident you’re found at fault for.

Your insurer may also offer a combined single limit, where the exact number represents the overall maximum payout for bodily injury and property damage coverage. Visit to learn more about different types of car insurance.

Property Damage Liability

If you’re in an accident and it’s determined to be your fault, your property damage liability coverage will have you covered. You won’t have to worry about paying out of pocket for repairs to the other driver’s car, no matter how minor or major the damage may be, as long as it falls within your policy limits.

In some states, it also covers the cost of a rental car while their vehicle is being repaired. Unlike bodily injury liability, there is usually no deductible associated with this type of coverage.

In addition to cars, property damage liability also helps cover other types of property damaged in an accident you cause, such as fences, mailboxes, or buildings. Your insurance policy’s limits determine the extent of your property damage liability coverage, usually outlined as a combined single limit or a split limit, just like bodily injury liability.

Uninsured Motorist Coverage

While most drivers must carry liability insurance in the states where they drive, many people need it more. Uninsured motorist coverage, also called underinsured motorist coverage, helps pay for your damages if you get into an accident with one of these drivers and their policy limits aren’t high enough to cover your losses.

Certain states provide coverage for medical expenses and lost wages resulting from injuries through car insurance policies, which may be available as standalone options or combined with personal injury protection (PIP), ensuring timely payment regardless of fault.

UM and UIM are often listed as a single limit, which is more flexible than the traditional split limits found on most liability policies. You can choose higher UM/UIM limits without increasing your overall policy cost.

Medical Payments

Liability coverage fully covers the expenses of repairing other people’s vehicles and their medical bills caused by an accident you are responsible for. It also produces its lawyers’ fees and court costs (if applicable). However, liability car insurance doesn’t cover your bills or repair your vehicle after an accident. It would be best to have personal injury protection or health insurance for medical expenses and collision coverage for auto repairs.

The split limit format is the typical way of listing bodily injury liability and property damage liability. These are typically divided into bodily injury per person and property damage per accident. But you can sometimes purchase a “combined single limit,” which is one combined number that covers both kinds of damages and injuries.

In addition to liability, most states require uninsured and underinsured motorist coverage, which helps protect your costs if a driver hits you without insurance. And some states also have medical payments coverage, which helps with your and your passengers’ medical expenses regardless of who caused the crash.