What you should know about your first auto insurance policy

By Allstate

Last updated: March 2023

Buying your first car is an important milestone. The independence that comes with having your own set of wheels is a great privilege. At the same time, being a car owner means you've got an important choice to make: What coverages do you need in your first "on your own" car insurance policy?

[Voiceover] So, you're ready to select auto insurance for your car. Where do you start? It's a good idea to learn about your options.

Here are some of the different types of coverage you may include in your policy.

Let's start with auto liability, which is required by law in most states. If someone gets hurt in an accident you caused, bodily injury liability coverage helps pay for your legal fees if you are sued as well as the injured persons medical bills and lost wages.

If you damage another person's property with your vehicle, property damage liability coverage may help reimburse the other party for repairs or replacement.

Next, let's look at coverage that helps pay your medical expenses if you're hurt in a car accident.

Depending on the state where you live, you may have the option of purchasing either personal injury protection or medical payments coverage. These may help pay doctor or hospital bills after a covered accident.

Another type is uninsured and underinsured motorist Coverage. If you're hit by a driver who doesn't have car insurance, uninsured motorist coverage helps pay for your medical bills and depending on where you live, repairs to your property after the accident.

Underinsured motorist coverage works similarly. It helps pay your medical expenses if you're hit by a driver whose liability coverage limits aren't sufficient to pay for your bills after the accident.

And then there are coverages that help if your car is damaged. Let's say you need to replace or repair your vehicle after a collision with another car or object. Collision coverage helps pay those costs.

What if your car was damaged by something other than an accident? Comprehensive coverage helps pay to repair or replace your car if it's damaged by things like theft, animals, falling objects or fire.

Finally, it's important to remember that each type of car insurance coverage has a limit, which is the maximum amount your insurer will pay for a covered claim. And some coverages have a deductible, which is the amount of money you pay out-of-pocket toward a covered claim.

Have questions? Reach out to your agent to learn more about what types of coverage may be best for you.

It's tempting to ask your insurance provider for the least expensive policy. After all, you have plenty of other expenses to cover now that you're a car owner. However, once you fully understand exactly what each part of your auto policy covers, you may decide that cheaper isn't necessarily better. Think about it: If your car was totaled in an accident, or you seriously injured someone, a few extra dollars of insurance coverage per month might be money well spent.

Here are some of the common coverages to consider for your auto policy.

Coverage that helps pay for damages you cause

There are two types of liability coverage. Both are required by law in most states.

Bodily injury liability:
If someone is injured as a result of an auto accident you caused, this coverage could help pay for your legal fees, as well as the person's medical bills and lost wages. This coverage often includes two separate limits: one that applies to each injured person ($50,000, for instance) and a second one that applies to each accident (for instance, $100,000).
Learn more about bodily injury liability coverage.
Property damage liability:
If you damage another person's property, such as a fence or garage door, with your vehicle, this coverage can help protect you. Property damage coverage may help reimburse the other party for their losses, so you don't have to pay for them out of your own pocket.
Learn more about property damage liability coverage.

Coverage that helps protect you if you're hurt

Personal Injury Protection (PIP):
If you're injured in a car accident, this coverage may help pay your health insurance deductible (if you have one) as well as medical costs that exceed your health insurance limits. This coverage may also help pay for your lost wages and "loss of services," such as picking up your kids from school, while you recover. Worst-case scenario: PIP may help cover your funeral expenses. Keep in mind that PIP is not available in all states.
Learn more about personal injury protection coverage.
Medical payments:
Like PIP, this coverage may help pay for your medical bills related to a car accident. However, this coverage also extends to your passengers and a family member who was driving the car when the accident occurred. Also, if you or a family member are injured in another car or as a pedestrian, this coverage can help pay for medical expenses.

Coverage that helps protect you from drivers without insurance

Uninsured/underinsured motorist:
This coverage can help protect you if you're hit by a driver who has no auto insurance or whose policy limits are too low to cover the accident's full costs. It can help pay for your medical bills and — depending on your state's insurance laws — possibly for damage to your vehicle.

Coverage that helps protect your vehicle

Collision:
If you need to repair or replace your vehicle after a collision with another car or object, this coverage can help cover the costs.
Learn more about collision coverage.
Comprehensive:
This coverage can help pay for damage to your car that isn't related to an auto accident. Examples: theft, damage by animals, fire or falling objects.
Learn more about comprehensive coverage.
Guaranteed Asset Protection (GAP):
If your vehicle is totaled in an accident or stolen, you insurance company typically will pay you fair-market value for the car. However, if you still owe a financial institution more than the car is worth, GAP coverage can help reimburse you for the cost difference.

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