Auto insurance is a type of liability coverage that protects you from financial loss in the event of an accident. It is required by law in most states, and it's necessary for drivers under 25 years old. If you don't have car insurance, you could face fines and even jail time if you get into an accident. It covers damages to other people's property, injuries to others, medical expenses, lost wages, and more. You may not need full coverage on every vehicle you own, but having some form of insurance will protect you financially in case of an accident.

There are three types of this insurance: collision, comprehensive, and personal injury protection (PIP). Collision insurance pays for damage to your automobile, such as dents, scratches, and broken windows. Comprehensive insurance covers additional vehicle damages, such as theft and fire. PIP insurance provides benefits for medical bills, lost income, and funeral costs.

Most policies include both collision and comprehensive insurance. Some policies offer additional options, such as rental reimbursement and replacement cost coverage. Rental reimbursement compensates you for the money you spend renting another vehicle while your damaged car is being fixed. Replacement cost coverage helps you pay for a replacement vehicle in the event that your car is totaled beyond reasonable repair.

Personal Injury Protection (PIP) insurance is optional in many states, although some require at least minimum levels of coverage. If you are injured in an auto accident and have a PIP policy, you can file a claim to receive money for medical bills, lost wages, and other related expenses.

I hope this has helped you understand how insurance works! Before selecting a car insurance policy, collect quotes from several companies to see which one will offer you the most coverage for your money. If you already have a policy, read it carefully to know exactly what your coverage includes.