Auto insurance is a product you should seriously think about getting if you own any type of vehicle, such as a van, pick-up truck or car. But for many car owners, it's not optional: auto insurance is required by law in most states in the United States. And whether you're leasing your automobile or financing your car payments, you need auto insurance. Virtually all lenders require auto insurance to ensure their losses are covered in the event the auto is destroyed or damaged in an auto accident.

There are three basic types of auto insurance you can get. They are liability insurance, full coverage insurance and uninsured/underinsured motorist insurance coverage. There are a number of variations, of course, but typically, liability insurance only covers the cost of damage caused by you to the other driver—damage to his auto (property damage) and personal injury—in case you are found to be liable for an accident. Full coverage usually covers any damage to your auto, whether it be caused by an accident, fire, vandalism, etc. Uninsured/underinsured motorist insurance protects you if you get into an accident and it's the fault of the other driver—but they don't have auto insurance.

A lot of auto insurance policies will cover more than just the cost of having your vehicle replaced or repaired. Some auto insurance policies cover any medical expenses you might incur as a result of an automobile accident. This is a plus if you don't have any health insurance or if your health insurance specifically excludes injuries due to an auto accident. Other auto insurance policies may include the cost of a rental car for your use while your vehicle is being repaired, the cost of towing your auto to an automobile repair shop, and more. Naturally, many of these extras will add to the cost of your auto insurance premium.

Speaking of the cost of your auto insurance, your auto insurance costs can go up or down depending on several variables. Your age, driving record, type of car you drive, state and town you live in, marital status, deductibles, and other options can all affect the cost of your auto insurance. Generally speaking, your insurance should cost less if you have a good driving record without any violations or accidents, you've taken some sort of driver's education class, or you purchase other insurance from the same insurance company—such as property insurance—along with your auto insurance.

If you're looking to buy a new car, consider the vehicle's safety rating and cost of auto insurance before you sign on the dotted line. Few things can be as upsetting as buying the car of your dreams, only to find out your monthly auto insurance premium is the same (or more!) as your monthly car payment. As a rule of thumb, the more safety and security features (air bags, anti-lock brakes, anti-theft devices, etc.) your car has, the lower your auto insurance premiums tend to be.