In an effort to complicate the process of signing up for car insurance, there are several types of coverages that you must choose from.
Some coverages are required by law, some aren't. Check with your state's Department of Insurance to find out what's mandatory.
Liability Coverage
This is the foundation of any insurance policy -- generally, the coverage that most states require you to have before you get behind the wheel.
If you're at fault in an accident, liability insurance will pay hospital bills, lost wages, property damage, and any legal fees for the person you hit or caused injury to (commonly referred to as the third party).
Collision Coverage
Collision coverage will pay for your vehicle to be repaired if you cause an accident. However, you must pay your deductible (money paid out of your pocket) before your insurance company picks up the tab.
If the cost to repair your vehicle is greater than the actual cash value of your car, the insurance company will "total" (destroy) your vehicle.
Comprehensive Coverage
With this coverage, your insurance carrier will pay for damages not caused by another automobile. This includes acts of vandalism, theft, fire, hitting an animal, hurricane, asteroid -- you get the idea.
Uninsured Coverage
This coverage is required in many states. Your expenses will be covered if you're the victim of a hit and run or struck by an uninsured motorist.
Personal Injury Protection (PIP or No-fault)
Pays for your medical expenses, rehabilitation, funeral expenses, lost wages, and in-home assistance for you and your passengers injured in an accident, regardless of fault.
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