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Types of Car Insurance

When people talk about types of car insurance they’re usually referring to the different kinds of coverages available to drivers to protect their cars. Your car insurance policy is a collection of different coverages—some legally mandated, and others that are optional. 

What are the different types of car insurance coverage?

Insurance companies offer different types of car insurance. In many cases, these coverages are optional. And while it can be cheaper to drive around with bare minimum coverage, you might have second thoughts if you’re involved in a pricey accident. 

Below, we’ll dig into some of the different coverages themselves. 

Liability

Liability coverage is the most common type of car insurance, and most states require that all drivers have some form of this coverage. 

Liability coverage will pay for any damage you cause to another person’s vehicle, or to their property, like a fence or mailbox. It also pays for bodily injury, like if someone suffers a broken bone or whiplash from an accident that was your fault.

The  limits for liability coverage apply per person and per accident, and depend on the type of liability—on whether the claim is for property damage or bodily injury liability. If you cause an accident that requires payment over the liability limits you purchase from your insurer, you may have to pay for the remaining expenses out-of-pocket. 

Uninsured and underinsured motorist

Uninsured motorist (UM) coverage kicks in when your car is hit by a driver who does not have insurance, or when you’re the victim of a dreaded hit-and-run. It pays for your medical bills  and lost wages, and those of your family members or other passengers in the car when the accident happened, up to your limits.  

Underinsured (UIM) motorist coverage applies when the driver who caused the accident does have liability insurance, but with limits that aren’t high enough to cover the damages. In the case of an underinsured motorist, their policy would pay first—and then your UIM coverage would make up the difference in costs, up to your limits. Teamwork!

Neither of these coverages pay for property damage to your car. You would need to submit a collision claim on your own policy, and your deductible would apply. 

Several states require drivers to purchase uninsured motorist coverage, so make sure you know what’s required where you live when getting a car insurance policy. Even if it’s not required, you might want to add these coverages for your own peace of mind.  

Comprehensive coverage

Comprehensive coverage covers damage that wasn’t from a car accident, like hail, flood, storms, fire, vandalism and more. This will also cover the cost of repair or replacement of your windshield if it’s cracked. You can choose your deductible for comprehensive coverage on a Lemonade policy, from $250 to $2,000.

Comprehensive insurance is usually an optional part of an auto insurance policy, but it may be required by a leasing company or lender if your car is leased or financed. When you pay off the loan, you can choose to keep the comprehensive coverage, or drop it. 

Collision coverage

Collision insurance covers the cost of repairing a car after an accident, regardless of who caused it. A Lemonade Car policy offers deductibles between $250 and $2000 for collision coverage; keep in mind that lower deductibles lead to higher monthly premiums.

In most cases, you’re required to have collision coverage if your car is leased or financed. If the car is paid off, then collision coverage is optional—but keep in mind that some insurers may only allow you to buy collision coverage if you also have comprehensive coverage as part of your car insurance policy.

Medical payments coverage and Personal Injury Protection coverage

Medical payments (aka MedPay) coverage will pay for medical bills related to an accident. It will cover you and the other passengers in the car for things like the cost of health insurance copays and deductibles, doctor or hospital visits, surgeries, X-rays, ambulances, and more.

MedPay is also sometimes referred to as medical expense coverage. It is not required but may be a good add-on if you want to be truly protected on the road. If you’re responsible for a car accident and you (or your passengers) need medical care, you may have to pay for it out-of-pocket if you don’t have medical payments protection, and if your health insurance doesn’t foot the bill.

Medical payments protection isn’t available in all states because some require similar coverage called personal injury protection, or PIP, that will similarly cover damage for medical care in case of an accident.  The main distinction between MedPay and PIP is that PIP covers more stuff, including health costs and resulting lost wages for you and your passengers after an accident, regardless of who was at fault.

Gap insurance

Even if you take out a car loan, a new car’s value drops as soon as you drive off the lot. Bummer. In most cases, your car’s actual cash value is less than the amount you owe on it. 

If you get into an accident, the insurance company will reimburse you up to the actual cash value of the car. If that value is less than what you have left to pay on the loan, you’ll have to cover the difference out-of-pocket. 

That’s where gap insurance comes in. Gap insurance coverage would pay out the difference between the car’s value and the amount you owe on the car. Gap insurance is usually required if you’re leasing or have a loan on the car.

Temporary transportation coverage

If you’re in a car accident, it can take a few days or even weeks to have your car repaired. With a Lemonade Car policy, temporary transportation coverage is optional, but it may offer some perks you’re interested in. Those include rental reimbursement, or reimbursement for rideshares and public transportation. Whether you decide to go with a rental car or call a Lyft you can expect coverage for up to 30 days (with the coverage limits listed on the declaration page of your car insurance policy). 

Roadside assistance coverage 

Some insurance companies offer roadside assistance coverage for an additional cost, which provides help fixing a flat tire, charging a battery, or having your car towed to a mechanic. At Lemonade Car, roadside assistance is included as part of your policy for no additional cost as long as you drive with the Lemonade app on your phone.

Glass coverage 

Glass coverage will pay for the cost to repair or replace the glass in your car after an accident. Depending on the type of coverage you buy, the insurance company may cover all or some of the cost of repair or replacement. 

At Lemonade Car we’ll cover the cost of repairs if your windshield, backglass, windows, moonroof, or sunroof break because of something other than a collision if you select this coverage . In some states, you’ll be able to enjoy this coverage with a $0 deductible, meaning you won’t have to pay anything out-of-pocket.

Pet injury coverage 

If you frequently drive your pet around, you can purchase extra coverage to protect your fur fam. Pet injury coverage will cover some or all of your four-legged friends’ bills in case of an accident. With a Lemonade Car policy this includes the cost of veterinary care, up to $1,000, if your pet is injured.

Wall charger coverage 

An auto insurance policy that prioritizes environment-friendly drivers, or in this case drivers with electric vehicles, should include coverage for a wall charger. At Lemonade Car this includes up to $3,000 coverage for your wall charger at home, and a portable one if you have one.

Types of Car Insurance
Please Note: These definitions don’t alter the terms, conditions, exclusions, or limitations of policies issued by Lemonade. They are intended for educational purposes only - they’re not meant to be used in lieu of professional legal or financial advice. We’ll do our best to keep them updated, but they may not always reflect current industry developments. Feel free to use the terms with attribution (friends don’t let friends plagiarize!)
Insurance provided by Lemonade Insurance Company, 5 Crosby St. 3rd floor, New York, NY 10013 Lemonade Insurance Agency (LIA) is acting as the agent of Lemonade Insurance Company in selling this insurance policy, except that Lemonade Life Insurance Agency (LLIA) is acting as the agent of one or more unaffiliated companies that provide life insurance. Both LIA and LLIA receive compensation based on the premiums for the insurance policies each sells. Further information is available upon request.