The world of automobile insurance can be confusing. Unless you are an insurance agent, or have a law background, many of the terms might be unfamiliar to you. “Liability” and “personal injury protection” – what does that mean and what does it have to do with driving a car? It’s important to understand this jargon so that you can purchase the auto insurance you need, and pass over the coverages that you don’t. After all, informed decisions are the best decisions that you can possibly make.

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Property Damage Liability

This insurance protects you in the event that you damage someone else’s property with your vehicle. A common example of this is if you get into a car accident and there is damage to other person’s vehicle. If you caused the accident (at-fault), then you are “liable” for the property damage that you inflicted on the other car. This insurance coverage will pay for the repairs or replacement of that vehicle. Property damage liability also covers damages you cause to other objects besides motor vehicles, such as buildings, lampposts, etc. A certain amount of property damage liability insurance is required in order to legally drive your vehicle. Different states have different limits of property damage liability that you must carry (usually around $100,000).

Bodily Injury Liability

This form of liability insurance covers the costs of injuries you may cause another person in an auto accident. These can be expenses like medical bills, lost wages, and pain and suffering. These bills can be tremendously expensive, which is why bodily injury liability is also mandatory in many states. Others states have “No-fault” insurance, where each insurance company pays for their client’s medical bills (up to certain limit). To learn if your state is no-fault, check out our handy states guides .

Collision

This coverage will pay for damage to your vehicle if you get into an accident . This is used when you are at-fault in a crash. Unlike liability insurance, this is optional – if own the auto, that is. If you are leasing or have a loan out on a vehicle, the financial institution may require that carry this coverage .

Comprehensive

This is sometimes known as “other than collision”, and this moniker pretty much says at all. The coverage pays for damages to vehicle that results anything not related to a car accident. Common examples include theft, fire, and vandalism. Comprehensive can also extend to cover other “Acts of God” like earthquakes, floods, tornados, etc. Like collision, this coverage is optional if you happen to own the vehicle.

Uninsured/Underinsured Motorist

This coverage protects you in the event of a crash with a motorist who has very little insurance (such as the required minimum), or none at all. If you have this coverage, the insurance company will pay for your medical bills (note collision insurance covers your physical damage costs – though uninsured/underinsured property damage insurance is also available). This coverage will also pay the medical bills, including lost wages, if you are struck by a hit-and-run driver.

These are the basics, the building blocks, of automobile insurance. Some of these coverages are mandatory; others are optional, depending on where you live. Ultimately, though, there is no “one size fits all” method of acquiring car insurance. Everyone has different needs, so now that you have a better understanding of what car insurance coverages are available, try and determine what automobile insurance is right for you. And it’s never been easier to find the cheapest car insurance rates available. Get your online quote today at Cheap Quotes Car Insurance