- States that require some sort of insurance for a vehicle are typically looking for liability insurance. Some states require proof of liability insurance to register a vehicle, while others do not require proof to register but require drivers to have the coverage nonetheless. Liability insurance covers any property damage on cars and buildings and covers medical bills in case of injuries from an accident.
- Collision insurance protects the driver's vehicle if is damaged in an accident. With collision coverage, the insurer pays for the repairs instead of requiring the driver to pay out of pocket, though the driver usually does have to pay a deductible before the coverage kicks in. Insurance companies pay approximately the amount the car was worth prior to the accident if the vehicle is totaled. This type of coverage is not required in every state, and is usually not a good idea if a car is old and not worth very much.
- Unlike liability and collision insurance, comprehensive insurance covers the car in case of theft, weather damage or animal collision. This coverage is nice to have but can get expensive and might not be worthwhile if the car is relatively easy to replace. Vehicles with anti-theft features and tracking devices can typically get this coverage at a cheaper price.
- Uninsured motorist policies cover damage caused by an uninsured motorist or a driver who may not have a sufficient insurance policy to cover an accident's cost. Some states require this type of coverage, while others do not.
- Medical or personal injury protection insurance covers costs associated with medical procedures and personal injuries resulting from an accident. Injury costs can be astronomical, and this policy, regardless of who is at fault, covers both driver and passenger medical costs. Drivers who hold a good health insurance plan might not find use for this type of policy.
- No-fault insurance policies cover costs regardless of who is at fault. It covers both injury and property damage. This type of insurance policy is not available in most states. It can get expensive and may not be necessary if the vehicle is inexpensive to replace.
- Gap insurance is ideal for drivers still paying off their vehicle who owe more money on their vehicle than they could afford to pay off on short notice. This policy covers any owed money for the vehicle. In some cases, lenders require buyers to have this type of policy prior to purchasing a vehicle.
