Driving and even owning an automobile exposes you to the risk of devastating financial losses. A split second error in judgment while driving or someone else’s poor judgment can result in thousands of dollars in property damage and personal injury.

Automobile insurance reduces your risk of devastating financial losses in the case of an accident. It is important to keep in mind that you are insuring against major losses, and that insurance will not pay for every penny.

Auto insurance is purchased by the owner of the vehicle to provide the driver financial protection against damage to or theft of the vehicle and possible bodily injury that results from traffic collisions. It also protects the insured and against liability that could also arise from causing damages to other persons, vehicles or properties.

Liability – When you are at fault, this coverage pays for accidental bodily injury and property damages caused to others. This includes medical expenses, pain and suffering and lost wages. Also included is damage you cause to property and automobiles as well as court costs. State laws require a minimum liability, however it is a good idea to always get more coverage than your state requires.
Comprehensive – This coverage pays for loss or damage to the insured vehicle due to perils such as fire, wind, hail, flood, vandalism or theft.
Collision – This coverage pays for damages to your vehicle caused in a collision whether it be with another vehicle or an object.
Medical Coverage/PIP – Pays medical expenses regardless of who is at fault in an auto accident.
Uninsured Motorist – Pays your car’s damages when an auto accident is caused by a driver who doesn’t have liability insurance.
Underinsured Motorist – Pays your car’s damages when an auto accident is caused by someone who has insufficient liability insurance.
Rental Reimbursement will pay for a rental car if your car is damaged due to an auto accident.

Auto insurance covers the repair of damaged vehicles involved in an accident and the medical costs of those involved. However, each policy has a limit of what it will pay, so it is important to make sure you have adequate coverage.

These limits are quoted as three figures such as 100/300/50:

The first number (i.e.: 100) represents the per-person bodily injury limit-meaning that the insured person has up to $100,000 worth of protection for EACH person they injured.
The second number (i.e. 300) represents the maximum amount allowed per accident for bodily injury-meaning it would pay up to $300,000 for bodily injury for all involved for one accident.
The last number (i.e. 50) represents the per-accident property damage maximum to cover costs to repair damage done to vehicles involved ($50,000).

Many experts recommend having 100/300/100 as minimum coverage since you are responsible to cover any damage or medical bills that exceed what the auto insurance will pay. For example, if you cause an accident and an injured person had medical bills for $52,000 and you are only covered for $25,000, you will owe $27,000. Insurance helps keep you from this kind of risk and protects you from financial devastation, but it is important to talk to an auto insurance specialist to make sure you have adequate coverage.

It is a good idea to first consider:

The kind of car you have – the newer the vehicle, the more the cost to insure it
Your driving record – less tickets and less traffic violations equal lesser cost in premiums
Your limit -the amount of money you are willing to pay for insurance, its deductible and premiums.