Car insurance has two major components: collision and liability. Collision coverage pays for damage to your car when your car hits, or is hit by, another vehicle or other object. To keep your premiums low, select as large a deductible as you feel comfortable paying out of pocket. For older cars, consider dropping this coverage, since coverage is normally limited to the cash value of your car. For instance, if the 6 month premium for the collision portion of your automobile insurance totals more than the book value of your car it probably makes sense not to purchase it.
 

1. . Bodily injury liability provides protection if you injure or kill someone while operating your car. It also provides for a legal defense if another party in the accident files a lawsuit against you. In the event of a serious accident, you want enough insurance to cover a judgment against you in a lawsuit, without jeopardizing your personal assets. Bodily injury liability covers injury to people, not your vehicle. Therefore it’s a good idea to have the same level of coverage for all of your cars.


2. Property damage liability protects you if your car damages someone else’s property. It also provides you with legal defense if another party files a lawsuit against you. It is a good idea to purchase enough of this insurance to cover the amount of damage your car might do to another vehicle or object.There are other subsets of auto insurance that vary from state to state.

3. Uninsured motorists coverage pays for your injuries caused by an uninsured driver or, in some states, a hit-and-run driver, in a crash that is not your fault. In some states there is also uninsured motorist coverage for damage to your vehicle. Given the large number of uninsured motorists, this is very important coverage to have, even in states with no-fault insurance.Medical Payments insurance is extra auto insurance that will specifically cover your medical bills that may not be covered by the other guys insurance or if you or your passengers are injured in a no fault accident. Personal Injury Protection (PIP) is similar to Medical Payments and is required in many states that don't require uninsured motorist insurance.

4. Comprehensive physical damage coverage pays for losses resulting from incidents other than collision. For example, comprehensive insurance covers damage to your car if it is stolen; or damaged by flood, fire or animals. To keep your premiums low, select as high a deductible as you feel comfortable paying out of pocket.Some companies will give you a discount on your automobile insurance if you also carry other types of policies with them like home owners insurance. Other discounts may be given if you have anti theft devices, if you have attended a defensive driving course and things like your driving record, where you live, age of drivers on the policy and the type and number of vehicles on the policy can affect the price of your car insurance.

5. Personal Injury Protection coverage is a set of coverage’s not available in all states. It’s often a required part of your car insurance policy. If you or another individual is injured in an accident, PIP plans generally help pay for medical costs, lost wages, and other expenses. PIP coverage vary from state to state so it’s better to check what is available and required in your state. In states where it's optional, you will want to consider whether you need this coverage. If you and your passengers are already covered by existing health plans and disability insurance, you may find this to be a waste.

6. Uninsured motor coverage pays for medical expenses, lost wages, and other general damages when policyholders, authorized drivers, or passengers are injured in an accident caused by a driver who has no auto insurance. It may also pay for injuries in hit-and-run accidents. Covered costs are subjected to the limits as per policy purchased by you.


7. Underinsured motorist bodily injury coverage pays for similar expenses when the accident is caused by a driver who has insufficient auto insurance coverage.