What does auto insurance cover? Bodily injury liability coverage - Pays for your legal fees and any claims made against you if your car injures or kills someone. It also covers any family members living with you and anyone driving your car with your permission. Property damage liability coverage - Pays your legal fees and any claims made against you if your car damages someone else's property. Personal injury protection - Pays for you and your passengers medical expenses when you're involved in an accident. It also pays for you and your family's medical expenses if you're injured in someone else's car or are walking. Read on auto insurance ratings.