Auto Insurance 101: What Are You Really Paying For?

Let’s be honest: most of us buy car insurance because we have to. But when it comes to understanding what we’re actually paying for? That’s where things can get a little fuzzy.

Between liability, collision, comprehensive, and a handful of other terms, it’s easy to feel like you’re just crossing your fingers and hoping you’re covered when it matters. The good news? It doesn’t have to be that way.

Here’s a plain-English breakdown of the main types of auto insurance—and how to figure out what makes sense for you.

1. Liability Insurance (This One’s Required)
This is the coverage you’re legally required to have in almost every state. It covers damage or injury you cause to other people—but not damage to your own car.

There are two parts:

• Bodily injury liability helps pay for medical costs if you injure someone in an accident.
  
• Property damage liability covers damage to another person’s car or property.
  

Why it matters: Liability insurance protects you financially if you cause an accident. But state minimums are often pretty low—so if you can, consider increasing your limits to better protect your savings and assets.

2. Collision Coverage
Collision coverage helps pay to fix or replace your car if you hit something—whether it’s another vehicle, a tree, or a fencepost.

Good to have if:

• You have a newer or more valuable car.
• You’d struggle to pay out-of-pocket for major repairs.
• You’re financing or leasing—most lenders require it.

If you drive an older car that’s not worth much, it might make sense to skip it and save the monthly cost.

3. Comprehensive Coverage
Comprehensive insurance covers all the random things that can happen to your car that don’t involve a crash, like:

• Theft
• Vandalism
• Weather damage (hail, flooding, fallen tree limbs)
• Fire
• Hitting a deer (yes, that’s a thing)

Good to have if: You want peace of mind knowing you’re protected from more than just accidents. Like collision, it’s usually required if you’re leasing or financing.

4. Uninsured and Underinsured Motorist Coverage
What happens if you’re hit by someone who doesn’t have insurance—or doesn’t have enough? This coverage steps in to help pay for your medical expenses and car repairs when the other driver can’t.

Why it’s important: Not everyone on the road is carrying the right coverage. This keeps you protected even if the other driver isn’t doing their part.

5. Personal Injury Protection (PIP) or Medical Payments
These options help cover your medical bills after an accident, no matter who was at fault. Depending on your state and your policy, it might also help with lost wages or rehab costs.

When it’s helpful: If you don’t have great health insurance—or if your state requires it (PIP is mandatory in “no-fault” states).

6. Roadside Assistance and Rental Car Coverage
These extras aren’t required, but they’re good to have if:

• You don’t have another car to use while yours is in the shop
• You’ve ever been stranded with a flat tire or a dead battery

Why people like it: They’re affordable add-ons that offer convenience when things go wrong. Sometimes that peace of mind is worth the few extra dollars a month.

So… What Do You Really Need?

There’s no one-size-fits-all answer here. It depends on things like:

• How new (or valuable) your car is
• Whether you lease, finance, or own it outright
• Your budget, risk tolerance, and ability to cover out-of-pocket repairs
• How much you drive—and where

If you’re not sure where to start, don’t worry. That’s what we’re here for.

Let’s Figure It Out Together

At National Insurance Brokers, we make auto insurance easier to understand (and easier to afford). We’ll walk you through your options, explain what everything actually means, and help you build a policy that fits your life—not just a checklist.

Get in touch today for a free, no-pressure quote or policy review. We’re here to help you hit the road with the coverage you actually need—and nothing you don’t.