Auto insurance can be broken down into several different parts including:

• Liability
• Comprehensive / Collision
• Health / Medical Payments / Personal Injury Protection
• Uninsured Motorist
• Loan/Lease
• Towing

Depending upon your state laws, you may not have to purchase all the different parts of auto insurance. Some states will require that you carry minimum levels of auto insurance coverage to protect drivers of other cars, people, or property that is damaged at your expense. Other states will require that you only carry "proof of financial responsibility" in order to meet the insurance needs.

Liability Insurance Coverage
Liability insurance coverage will cover claims against the policy holder if they cause an accident. If you operate a vehicle other than your own, liability insurance many not cover you if you are to get into an accident in this car. Each state does require certain levels of minimum liability insurance because it protects others from the damage caused by you. Liability coverage also will pay for your legal expenses if you cause an accident. Liability insurance coverage also includes bodily injury coverage and property damage coverage.

Bodily injury liability insurance covers other people's deaths or bodily injuries for which you are responsible. This type of coverage will also provide you with a legal defense if someone filed a lawsuit against you. This coverage is required in most states and is highly beneficial.

Property damage liability will cover you if your car damages someone else's property. You may have seen stories on the news where a driver falls asleep at the wheel and crashes into someone else's car or home. If you are one of these unfortunate individuals, having property damage liability will save you a bundle not only for the cost to replace the fence, car or garage, but from legal damages too. If the other party files a lawsuit, this type of coverage will provide you with a legal defense. Most state requirements are pretty low on this coverage, covering about $5,000. Most auto insurance companies suggest you cover a minimum of $50,000 for each vehicle you own.

Collision and Comprehensive Coverage
Comprehensive coverage is often called "full coverage" auto insurance. If you are at fault for a car accident, the collision portion of your policy will pay to repair your own vehicle or to replace the vehicle if it is considered a total loss. Typically your car will be considered totaled if it is more than 70 percent damaged. Having comprehensive coverage on your vehicle will pay for damages to your car that isn't due to car accidents. If your car is stolen, damaged by flood or fire or animals, this coverage will pay to fix your vehicle. This coverage has different deductible levels, so this choice is up to you. If you live in an area that is prone to natural weather conditions like a tornado, hail storms, hurricanes, or volcanoes, adding comprehensive physical damage coverage is a good idea. Deciding how much coverage you need is again up to you. A good idea is to choose the highest deductible you can afford. Comprehensive and collision coverage can account for 30 - 40 percent of your total premium. A good way to determine if you need comprehensive coverage is to look at the Kelly Blue Book value. If the cost of comprehensive and collision coverage totals more than 10% of your car's total worth, then you need to lower your amount. Most auto insurance companies will tell you not to use this insurance if your car is more than 5 years old. Keep in mind that if you do not select comprehensive coverage, you will be responsible for paying the repair bill if your car is damaged, totaled, or stolen.

Comprehensive coverage also takes care of cracked windshields. This is an additional feature you can choose to add to your policy at any time. Comprehensive coverage does extend to rental cars as well; again this is an additional feature that you can choose to add.

Uninsured Motorist Coverage
If you are ever involved in an auto accident with an uninsured motorist, you may be forced to pay for all your medical expenses and for the damage to your car. Purchasing uninsured motorist coverage is a smart idea because it will cover bodily injuries to you and your passengers if the crash is not your fault. Uninsured motorist coverage will protect you from a hit-and-run accident and will cover the funeral costs for you and your family if you are involved in an accident with an uninsured driver. Uninsured motorist coverage isn't too expensive to add to your policy (typically $40 a year for $100,000 worth of coverage).

Check your local state laws on uninsured motorist coverage to see what legal action you can take if you are struck by an uninsured motorist.

Medical Payments / Health / Personal Injury
Medical Payments or Health coverage will pay for the medical expenses of you and your passengers if you are ever in an accident. This coverage includes if you are driving your car, driving someone else's car, or injuries to you or your family members if you are a pedestrian.

The health coverage benefit or personal injury protection will not only pay for your medical expenses, but it will include lost wages for you and your passengers as well as any funeral costs. Health coverage insurance is not available in every state. If you currently have health insurance or life insurance, you probably don't need to purchase auto health insurance, as they will all be covering the same things.

Loan / Lease Payoff Coverage
If you acquire a loan or a lease to pay for a car, you need to purchase loan or lease insurance. This type of coverage will protect you if the total damage to the car exceeds the cars value. Due to sharp decline on new vehicles, this can be a common occurrence. If you do not have this coverage and the car is totaled, you will still owe the cost of the loan on the car, plus the damage charges, this is called "upside-down" or negative equity. The auto dealer typically will offer you this type of insurance at the time you purchase the vehicle. If you do sign up for this insurance, ask the dealer to include this figure in your car loan, that way you do not have to remember to make an additional monthly payment.

Depending upon the state you live in, loan / lease payoff coverage could be a requirement. Some auto sales companies will call this "Total Loss Coverage" and inform you that it is a requirement to purchase at the time you purchase the new car. Be sure to check your local state laws before you sign any paperwork, as some dealers prey on unsuspecting individuals.

Towing Insurance
Towing insurance is an added benefit that is usually a low-cost to your total insurance policy. Many car insurance companies call this "roadside assistance coverage". Towing insurance will pay for the cost of a town that is related to an accident, or that is covered under the automobile policy of insurance. Ask your insurance company what their roadside assistance coverage includes before you sign up. Some auto insurance companies do not provide towing services for mechanical breakdowns, flat tires, or gas outages.

As you can see there are several types of auto insurance protection. Each type of auto insurance is designed to protect you from damages in one way or another. When you are selecting an auto insurance policy, it is a wise decision to shop around and obtain quotes from several different auto insurance providers. Always check your local and state laws before you begin researching different auto insurance providers, you may find that it is cheaper to insure your entire family through the same company you have your health or life insurance policy through. If you think your current auto rates are too high, ask your auto insurance provider if there are any discounts available or how you can restructure your existing policy to be more affordable. By increasing your deductible, you will reduce your overall payment amount, but just be sure you can pay this amount if you were to be involved in an auto accident.

When you are purchasing a car, try to buy one that has passive-restrain systems like airbags, antitheft devices, ignition locks, and child-safety features. These added features to your car have been shown to reduce the severity of injuries in auto accidents and they can prevent your car from being stolen. If you have a teenage driver, you will pay more for auto insurance. You can keep your rates low if you teen demonstrates reasonable responsibility to the insurance company by being a safe driver. Every time your teen gets a speeding ticket, or is in an auto accident, your rates will increase. If you are prone to filing auto insurance claims often, your rates will be much higher and the quotes you receive from other auto insurance companies will be higher as well.