Most people do not understand the car insurance rate or what coverage they actually receive for the money they are paying. Because every state except for two, Wisconsin and New Hampshire, require every driver to have some type of auto insurance before driving, you need to know some basics in order to determine what you need and how much.

The car insurance policy is composed of bodily injury, property damage, medical or personal injury, comprehensive, collision and uninsured or underinsured motorist. These six basic coverage plans make up your car insurance policy. If you receive an auto insurance quote, you will see that the collision and comprehensive cause the car insurance premium to be higher.

The liability clause consists of the bodily injury and property damage. Most states only require mandatory liability insurance for driving. The liability insurance covers damage you do to someone else when an accident is determined to be your fault. Some states have a minimum requirement for liability insurance, but in an accident, this might be inadequate coverage. You should always have a sufficient amount of liability insurance to cover all bodily injury costs and property damage costs.

If you have collision on your car insurance policy, your car repairs are covered when you cause an accident. This coverage cost the most when it is included in a car insurance rate. Comprehensive coverage pays for damage done to your vehicle that is not the result of an accident. This might include fire, vandalism and accidentally hitting a horse or deer.

Medical insurance and personal injury covers you and the passengers in your car. This insurance pays no matter who is at fault. You are also covered if a car, while walking across the street and not even in an automobile, hits you and causes injury. Personal injury pays for anything that relates to medical and lost of wages, funeral costs or childcare while you recover. It does not cover your lost when a car insurance claims adjuster totals your vehicle and you lose money because of the blue book value.

Uninsured motorists insurance covers if the other driver does not have insurance or you are involved in a hit and run of your vehicle. The underinsured motorist's coverage pays for anything the other driver's car insurance may not cover because of having minimum insurance coverage. Once you understand the basics of the car insurance policy, it is easier to find the right auto insurance coverage that will protect you from any potential financial problems because of insufficient coverage. Always have enough coverage even if the minimum required insurance for your state is lower. This will protect you from any loss due to a lawsuit for injury or death from an accident.