Liability

• Liability insurance is mandatory in every state, but the exact amounts of coverage can vary according to state law. Liability protects others from loss if you cause an accident. Your policy likely shows the limits as three numbers, such as 50/100/50. In this example, the policy would provide $50,000 in medical payments for one person, $100,000 if more than one person is injured in the same accident and $50,000 to repair property damages others incur in one accident.
  
  

Personal Injury Protection

• Personal injury protection, or PIP, pays your medical bills and lost wages if you are in an accident. It does not matter who causes the accident. PIP is mandatory in some states and optional in others. Some states refer to this coverage as no-fault insurance.
  
  

Uninsured and Underinsured Motorist

• This type of coverage is mandatory in some states. Uninsured pays your medical expenses if you are in an accident with someone who has no insurance, and under-insured motorist pays if your medical expenses exceed the at-fault driver's policy limits. Property damage coverage may be available in your state under the uninsured and under-insured coverages, but you will need to verify this with your agent since many companies offer only medical coverage.
  
  

Collision and Comprehensive

• These coverages are typically required by your lender until you pay off your note. Otherwise, you have the option of purchasing the coverages or declining them. Collision pays to repair or replace your car if you are in an accident. Comprehensive, however, typically covers repairs if you collide with an animal. Comprehensive coverage also pays for losses because of theft, weather or vandalism. Your policy limits will be the depreciated value of your specific vehicle rather than a set dollar amount. Both of these coverages are subject to a deductible, which is how much you must pay before your insurance pays.
  
  

Miscellaneous Coverages

• A variety of optional coverages are available for those who desire the protection. Rental reimbursement pays a daily rate for you to rent a car while yours is disabled or being repaired after an accident. Towing pays for you to have your disabled car towed to a repair shop, and may include other roadside services to unlock your car, jump your battery or change your flat. Guaranteed asset protection, or GAP, covers the difference between what you actually owe on your note and the depreciated amount.