Understanding car insurance can help you, not only if you find yourself in an unfortunate situation, but also help you save money.

Required Types of Car Insurance

There are different types of car insurance designed to protect you against various problems that can occur.  Some types are mandatory for all drivers while others are optional.  Also, laws regarding car insurance vary slightly from state to state.  Car insurance that is required in all states includes property damage liability and bodily injury liability.  Property damage liability covers any damage you do to someone else's property; bodily injury liability covers you if you are sued for injuring someone else in an accident.  If you are financing your car there are two other mandatory types of car insurance that you will be required to purchase: collision and comprehensive.  Collision covers repairs to your car no matter who is at fault in an accident while comprehensive covers just about anything else that can damage your car including natural disasters, fire, road debris, and vandalism as well as theft and sometimes accessibility to a rental car after a theft.

Recommended Types of Car Insurance

In addition to the types of required car insurance there are also types of car insurance that are not required but that are recommended to all drivers.  These types include personal-injury protection (PIP) to cover personal medical bills and some lost wages; underinsured and uninsured motorist to cover being hit by an uninsured driver or driver whose car insurance does not cover all of your costs; towing and service/rental car reimbursement covers you if your car requires towing and helps you pay for a rental car while your car is in the shop.

How to Know What You Need

Deciding how much coverage you need from your car insurance is as important step towards protecting yourself in case of an accident.  Aside from the required insurance in your state, you should explore the recommended types of car insurance as well and find out pricing if you decide to take on multiple types.  While you might be hesitant to spend a lot of money on car insurance, you don't want to find yourself in a financially strained position if you are involved in an accident. To know which policies are best for you, it is often best to speak to a car insurance professional to be sure that you understand all of your options and how much each option will cost you.  You can talk to any insurance agent in person, on the phone, or even online to explore your possibilities.

Things to Consider: Premiums and Deductibles

Keep in mind that a higher deductible means a lower policy premium.  Many people prefer a lower deductible because they figure that if they're in an accident, they don't want to be responsible for paying much of the bill.  But, if you have a higher deductible, your monthly premium payment will drop significantly and by the end of the first twelve months, you will have saved the difference.

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