Do I Need Car Insurance?

If you drive or own a car, you’ll likely need car insurance. Some form of car insurance is mandatory in most states, though the legal requirements and minimum limits vary by state.

Most require coverage for third-party bodily injury and property damage liability claims if you are at fault in an accident and injure another driver or their passengers or cause damage to someone’s property, such as a fence or mailbox. Medical coverage for you and your passengers may also be required in the form of personal injury protection (PIP) or medical payments (MedPay) coverage.

Physical damage coverages, such as comprehensive and collision, are typically optional, but they may be required if you finance or lease your car. These coverages provide first-party property protection for your vehicle if it’s damaged, and you’re responsible for paying the repair or replacement costs.

Types of Car Insurance Coverage

Since car insurance coverages can function differently between tort states and no-fault states, it’s important to discuss specifics with a licensed insurance agent or an insurance company.

Liability insurance

Liability coverage pays for costs associated with an accident for which you’re found legally at fault. Liability insurance generally includes two types of coverage:

• Bodily injury: This covers the expenses related to injuries or death for others (e.g., another driver, their passengers, or a pedestrian) when you are at fault. 
• Property damage: This covers the expenses for repair or replacement of others’ property (e.g., fencing, a home, etc.) you damage when operating your vehicle. 

Most states require drivers to carry a minimum amount of liability coverage before they can register and operate a vehicle in that state. You can find out how much liability coverage you need by visiting your state’s Department of Motor Vehicles (DMV) or by visiting our Auto Insurance by State guide.

Learn more about how liability car insurance works.

Uninsured motorist coverage

Uninsured motorist (UM) coverage provides financial protection if you are hurt in an accident and the other driver doesn’t have car insurance. Depending on where you live, this coverage may extend to cover property damage. Uninsured motorist coverage also pays if you are the victim of a hit-and-run. Your state may require you to carry a minimum amount of uninsured motorist coverage.

You may also want to consider underinsured motorist (UIM) coverage, which typically pays the difference between your expenses and the policy limit of the at-fault driver when their limits are insufficient. However, in some states, underinsured motorist coverage is not applicable unless your underinsured motorist limits are greater than the liability limits of the other driver.

Learn more about uninsured motorist coverage.

Personal injury protection (PIP)

This no-fault insurance coverage pays the medical expenses for you or your passengers if you are injured in an accident, regardless of who is at fault. Personal injury protection (PIP) may also apply if you’re riding a bike or walking and are hit by a vehicle.

In some cases, PIP coverage may reimburse you for lost wages and expenses for tasks you can’t perform while recovering, such as house cleaning.

PIP is required in some states and is optional in some others. As always, check with your state’s DMV to determine if PIP is available in your state and if you are required to carry it.

Learn more about how PIP insurance works.