Automobile Liability Insurance

It is required by most state auto insurance laws. Liability car insurance protects you against the cost of property damage to others, and bodily injury that you cause to another in an automobile accident.  It does not usually provide coverage for you and your family if you are an insured nor if property damage occurs for which you are liable..

Automobile Liability insurance consists of bodily injury liability and property damage liability. Bodily injury liability pays  for the cost of bodily injury to others for which you are liable. Property damage liability insurance protects you from the cost of damage you cause to other’s physical property such as other automobiles, utility poles, fences etc.

You've probably seen automobile policies describe these coverages like this: 50/100/25. These numbers refer to auto liability insurance.

They're usually called  split limits of liability insurance because each limit generally applies individually.

 In the example above, $50,000 is the amount of bodily injury liability coverage for injury to 1 other person.
 $100,000 is the total amount of bodily injury coverage for injury to all persons   involved in the accident other than you and your family etc. (see insurance contract) $25,000 is the total amount of coverage for damage to the property of others.

Usually you have to be at fault to some degree for these coverages to apply.  Read your insurance contract to determine what coverages and limits are actually afforded by your contract.  If you have questions, contact your insurance company or agent.
 
Generally you want to have sufficient limits of coverage to cover at least the value of your assets and perhaps include your potential increase in net worth for the next several years. Discuss this with your attorney, financial counselor and insurance agent or company.  You should periodically review your limits to assure that they are still adequate relative to your financial exposure.
 

Medical Payments Insurance

This coverage provides for the cost of treatment of injuries related to a car accident. You, your family members and other passengers in your vehicle are covered, regardless of who is at fault for the accident. Depending on the specifics of the policy, medical payments coverage may also compensate for lost wages or services of a person injured in the car accident.

PIP, or personal injury protection, is similar to medical payments coverage, but usually provides broader coverage. Many PIP policies provide compensation for lost wages, funeral expenses, and pain and suffering. Discuss with  your agent.
 

These types of insurance protect you against injury caused in an automobile accident where the at-fault driver's liability car insurance coverage is inadequate or they do not have insurance. Though they're often described together, but they are two distinct coverages

Uninsured motorist insurance is needed when the other driver has no liability insurance coverage.

Underinsured motorist coverage pays for the cost of your injuries that exceed the other driver's coverage maximum.

Many states require neither type of coverage, but some require one or the other, and a few even require both. It is usually a good idea to get both coverages up to the limit of your Bodily Injury and Property Damage coverages. 

Collision Insurance

Collision insurance coverage pays for damage caused to your vehicle in an automobile accident, whether you are at fault or not. A standard collision automobile insurance policy will generally pay for any repairs up to the fair market value, or actual cash value of your car less the deductible, or some other method described in the insurance contract   This may be less than you think the car is worth, so if your car is customized or restored or has a higher value than a normal car of that year, make and model, discuss it with your insurance company or agent before you buy a policy.  Typically you would need to have a coverage that specifies the dollar amount of coverage you have.
 

Collision coverage usually also comes with a dollar deductible. It's the amount of money you pay toward repairs before your collision insurance picks up. The higher the deductible you're willing to pay, the less the collision coverage will cost.  If you have a collision loss, you may collect under your collision coverage from your own company and then your company will try to collect the deductible you paid, if both insurance companies (yours and the other party's)  agree you were not at fault.

Collision insurance coverage is not required by law in any state. However, if your car is financed, you may be required by the lender to carry collision insurance.  If your car is totaled in an accident or other covered event, and your loan balance is greater than the value of the car at the time of the total loss, GAP insurance may help pay the difference.  Ask your company or agent about this.

Comprehensive Coverage

Comprehensive is similar to collision insurance, except it covers damage caused to your vehicle caused by any unknown party or an act of God.

Vandalism, flood, hurricane, theft, and fire are all events usually covered by comprehensive automobile insurance. Be sure to read your comprehensive insurance coverage in your insurance contract for exact coverage details. The higher the deductible the lower the premium.
Like collision automobile insurance, comprehensive coverage will pay up to the fair market value of your car, or actual cash value or some other definition less your deductible..  Be sure to read the coverage in the insurance contract and be careful the full value of YOUR vehicle is covered. And although it's not legally required by any state, you will need it if your car is financed.

Automobile Insurance Endorsements

The information provided above is not a description of coverages provided by any specific insurance company, broker or agent, nor does it describe any particular insurance contract.  Definitions of specific coverage are contained in specific insurance contracts. You must read your insurance contract to determine what coverages are provided and not provided.  Your contract also contains specific definitions of terms including those described in general terms above.  If you have any questions about any insurance matters you should consult an insurance company, broker or agent.