Auto Insurance:

Driving is one of those everyday activities we barely think about… until something goes wrong. A blown tire on the highway, a deer that didn’t look both ways, or a driver who thinks turn signals are optional—any of it can ruin your day fast. Auto Insurance is what keeps one bad moment from turning into a financial disaster.

But most people only know the bare minimum: “I have full coverage.”
(Which, by the way, doesn’t actually tell us anything.)

Let’s break down what Auto Insurance really covers, how it works, and what matters most when you’re choosing your limits.

The Core Parts of Auto Insurance

Auto policies are built from several pieces. Some are required by state law, and others are optional but extremely important.

1. Liability Coverage (Bodily Injury + Property Damage)

This is the foundation of every auto policy. It pays for injuries or damage you cause to others in an accident.

Two parts:

• Bodily Injury Liability → Covers medical bills, lost wages, and legal fees.

• Property Damage Liability → Covers damage to someone else’s vehicle or property.

Choosing state-minimum limits is almost always a mistake. Medical bills and lawsuits get expensive fast.

2. Uninsured/Underinsured Motorist Coverage (UM/UIM)

This protects you if the other driver doesn’t have enough insurance—or any at all.

It covers:

• Your medical bills

• Lost wages

• Sometimes pain and suffering

In many states, 1 in 8 drivers is uninsured. This coverage is not a luxury; it’s essential.

3. Comprehensive Coverage

Protects your car from damage that isn’t caused by a collision.

Think:

• Theft

• Hail

• Deer strikes

• Vandalism

• Falling trees

• Fire

• Flooding (yes, surprisingly common)

If it wasn’t another car that hit you, this is the bucket that helps.

4. Collision Coverage

This pays for damage to your vehicle when you hit something—another vehicle, a pole, a fence, or someone who parked like a maniac.

*If your car is financed, comprehensive + collision are usually required.

5. Medical Payments / Personal Injury Protection (PIP)

Depending on the state, you’ll have one or the other.

These cover your medical bills regardless of who caused the accident.
PIP is broader and can include:

• Lost wages

• Rehab

• Replacement services (like childcare)

6. Optional Endorsements

Carriers offer add-ons that can make a huge difference:

• Rental car reimbursement

• Roadside assistance

• Gap coverage (a must for many new cars)

• Custom equipment coverage

• OEM parts coverage

These are small upgrades that solve big headaches.

Common Misunderstandings

A few things people think auto insurance covers—but doesn’t by default:

• Mechanical breakdowns

• Normal wear and tear

• Manufacturer defects

• Items stolen from inside the car (that’s homeowners/renters)

And again, “full coverage” is not an actual thing. It just means you have comprehensive + collision—but says nothing about your liability limits, UM/UIM, PIP, or extras.

How Much Coverage Do You Really Need?

Good rule of thumb:

• Liability: High limits (100/300/100 or higher)

• UM/UIM: Match your liability limits

• Comprehensive + Collision: If your vehicle still holds real value

• Medical/PIP: Follow your state rules + your personal health coverage situation

• Gap: Any time you’re underwater or close

Your car, your finances, and your state laws all shape what “enough” looks like.

The Takeaway

Auto Insurance protects more than your car—it protects your financial wellbeing every time you hit the road. The right policy makes a stressful situation manageable, quick, and far less expensive. The wrong policy makes everything harder.