Auto insurance is a contract between you and the insurance company protecting you against financial loss if you have an accident. You agree to pay the premium and the insurance company agrees to pay your losses as defined in your policy.
A basic auto insurance policy is comprised of six different kinds of coverage – Bodily Injury Liability, Medical Payments or Personal Injury Protection, Property Damage Liability, Collision, Comprehensive, Uninsured and Underinsured Motorist Coverage – each of which is priced separately. Most states require you to buy some, but not all, of these coverages. If you’re financing a car, your lender may also have additional requirements.