Very few people feel more out of their element than when they are shopping for car insurance. The problem is that the agents seem to hold of the cards in this game. Most car insurance shoppers do not know enough about the specific the legal requirements for the amount of coverage needed.
Car owners understand that there are two basic types of car insurance. You can buy liability insurance, or you can buy collision insurance. Most policies combine these two along with comprehensive insurance in a complete coverage package. Like anything else that you buy, if you go armed with the right information, you will have better success buying the coverages that you need.
The government requires you to buy liability insurance. The reason for this is simple to understand. If you are going to run around at high rates of speed in a an object that weighs in excess of a half a ton, the government expects you to protect financial interests of those who you might run down or hit. It makes good sense.
The amount of liability required is generally the lowest level of coverage offered by insurance companies. Anything above this amount is sold to cover your assets in the event of a catastrophic law suit by the other side in an accident. Many states do not require you to buy anything for the medical needs of your passengers, but most agents and insurance customers will push for medical insurance for your passengers.
Collision coverage is always required by the lender on a car loan. This is the insurance that will fix your car if you have a wreck. Legally, you do not have to have collision. You can decline to purchase this insurance. If you do, the bank will either buy this insurance and charge you for it, or they will come and get your car. If you own the car without a loan, you can elect to live without this type of coverage.
You can opt to add comprehensive coverage to your collision policy. This insurance will pay if a rock breaks your windshield. It also contains protection for the contents of your car agains loss and theft. Comprehensive will pay off for hail damage or other damage from acts of God.
The amount of coverages that you buy with each type of insurance is your call. You can have high or low deductibles. You can increase the amount of liability coverages. How you pay for your policy can affect cost. You have the option to pay all at once, semi-annual, or sometimes monthly.