Auto
How Auto Insurance Works
U.S. auto insurance typically combines liability coverage with optional physical-damage coverages. Learn the main parts of a car insurance policy in plain language.
By InsureGuide Editorial Team. Published April 2, 2026. Updated August 6, 2026.
Auto insurance is a contract that can pay certain costs if you injure someone, damage property, or damage your own vehicle, depending on the coverages you buy and the policy terms. Minimum requirements are set by each state, not by this website.
Liability coverage
Bodily injury liability can help pay others’ medical costs if you are at fault in an accident. Property damage liability can help pay to repair someone else’s vehicle or property. These coverages generally do not pay to repair your own car.
States set minimum liability limits. Minimum limits may be far below the cost of a serious injury claim. Higher limits cost more and still do not guarantee that every loss is covered.
Collision and comprehensive
Collision coverage can help pay to repair or replace your vehicle after a crash, including single-vehicle accidents, typically after a deductible. Comprehensive coverage can help with non-crash events such as theft, vandalism, hail or hitting an animal, also typically after a deductible.
Other common parts
Uninsured and underinsured motorist coverage, medical payments or personal injury protection (PIP), and roadside extras appear on many policies. PIP and no-fault rules are especially state-specific. Florida, Michigan, New York and other states have distinct no-fault or PIP frameworks that this overview cannot replace.
What commonly affects premiums
Insurers may consider driving record, vehicle, location, coverage choices, deductibles, mileage, and, where allowed, credit-based insurance scores or other factors. California, Hawaii, Massachusetts and some other states restrict certain rating factors. Always treat calculator results as educational ranges, not offers.