Do you drive a car? Then you need car insurance.  Not only is it required in most states in the United States, but without car insurance, even a seemingly minor accident can cost you thousands of dollars. A major car accident you ruin you financially.

But just because you need car insurance does not mean that you should just run out and buy whatever you can get for the cheapest price.  First learn about the different types of coverage available, and then shop for the best value for your dollar.

While most people talk about buying just car insurance, they are actually buying a group of different types of car insurance coverages. It helps to know about the different types of insurance, and if they are required in your state.

Some insurance only covers damage that you cause to others. So if you are in an accident and damage another persons car, your liability insurance will pay to fix the damage on their car, but not your car.

Bodily Injury Liability insurance covers physical damage that you cause to others. If you are at fault in an accident, and another person is hurt, your bodily injury insurance will cover there medical bills, up to the limit you are insured for.

Property Damage Liability covers damage you cause to someone else's property. Often this is there car, but it could be a house, a tree, or a garbage can.

Other types of car insurance will cover damage to your car, sometimes even if it is your fault. These types of insurance are not always required by your state.

Collision insurance covers...collisions. Run your car into another car, collide with a tree, flip your car and smash into the pavement. Collision insurance will pay for repairs to your car, even if it is your fault. Also covered is the cost of towing and storing your car in the case of serious damage.

Comprehensive Insurance covers just about everything that collision insurance does not. Except for mechanical failures, maintenance and repair. If a tornado picks up your car and drops it in another state, it is your comprehensive insurance that will pay for the repairs. Also covered is damage from other types of storms, fire and theft.

While collision and comprehensive insurance is usually not required by law, you may be required to purchase it if you have financed your car. Your lender wants to make sure you will pay back your loan, even if your car is totaled.

Other types of insurance you might be offered include medical insurance, which covers the medical bills of yourself and your passengers, and uninsured motorist, which will pay when your car is damaged by someone without insurance.

When choosing an auto insurance company, don't just look at price. You want to know that the company will be there when you need them! Look at how long the company has been in business, how they handle claims, how do they treat you? Make sure the company is registered in your state, and check with the Better Business Bureau. Choose three or four companies that you think you would like to work with, and then ask for a quote. 

Do not pay the first price you are quoted on car insurance. There are many things you can do to lower your premiums.

But don't skimp on coverage to save money. For example, in my state the minimum required property liability insurance coverage is $10,000. But with many new cars on the road costing over $40,000 it is not enough coverage. Remember, if you only have $10,000 in coverage, that is all your insurance company will pay, you will have to make up the difference.

The number one way to save money on your car insurance is to be a safe driver. Every accident you are in, every ticket that you get can increase your insurance premiums. Sometimes by quite a lot! I know one person who's liability insurance went from $600 per year to over $1,800 per year due to just one ticket! Follow the rules and don't speed! If you do get a ticket, consider going to traffic school, it can save you money in the long run.

Get Good Grades Most insurance companies will offer discounts to students if they have a B or better grade point average. This can be a great incentive to hit the books.

Take Care of Your Credit Some insurance companies will now charge you more if you have a poor credit score. I guess they feel that people with low credit scores are more likely to have accidents.

Raise Your Deductible Don't skimp on your coverage limits, but do feel free to make your comprehensive and collision deductibles as high as you can comfortably afford. Higher deductibles mean lower premiums.

Drop Collision and Comprehensive on older cars. If your car is totaled the insurance proceeds you receive will be based on the value of the car before the accident. If the blue book value of your car is low, you may be paying more for insurance in a year than you would receive in a claim! Generally, if a car is more than 5 years old, and paid for, it is a good idea to drop comprehensive and collision insurance.