Car insurance coverage explained (and what to skip)
Liability limits, comprehensive, collision, and the add-ons that mostly help the agent.
6 min read · Updated 2026-07-04
The three coverages you actually need
Liability (bodily injury + property damage) is legally required in almost every state. State minimums are dangerously low; raise limits to at least 100/300/100 (that is $100k per person, $300k per accident, $100k property). Uninsured/underinsured motorist coverage protects you when the other driver has no insurance — critical because roughly 1 in 7 U.S. drivers is uninsured. Comprehensive and collision cover damage to your own car.
When to drop collision
If your car is worth less than 10x your annual collision premium, it usually makes sense to drop collision coverage. Example: car worth $3,000, collision premium $500/year — dropping saves more than you would ever recover in a total-loss claim.
Add-ons that rarely pay off
New-car replacement (only worth it in the first 1–2 years), roadside from the insurer (usually cheaper via AAA or a credit card benefit), and gap insurance (only if you owe more than the car is worth). Rental reimbursement is cheap and worth it if you cannot afford to Uber for two weeks after a claim.
Key takeaways
- Raise liability limits well above state minimums.
- Uninsured motorist coverage is not optional in practice.
- Drop collision when the car is worth less than ~10x the premium.
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Educational content only. Not individualized financial, tax, or legal advice.