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A basic auto insurance policy generally includes six coverages.

Each coverage is listed and priced separately.

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1. Bodily Injury Liability

   This applies to injuries that you, the asssigned driver or policyholder, cause to someone else. You and family members listed on the policy are also covered when driving someone else’s car with their permission.
   It’s important to have enough liability insurance, if you are involved in a serious accident, you may be sued for a large sum of money. You should think about buying more than the state-required minimum to protect your assets like a home and savings.

2. Personal Injury Protection or Medical Payments

   This pays for the treatment of injuries to the driver and passengers of the policyholder's car. It can cover medical payments, lost wages and the cost of replacing services performed by someone injured in an auto accident. Some polocies also cover funeral expenses.

3. Property Damage Liability

   This pays for damage you (or someone driving the car with your permission) may cause to someone else's property. Usually, this is damage to someone else’s car, but it be damage to lamp posts, telephone poles, fences, buildings or other structures your car hit.

4. Collision

   This pays for damage to your car from a collision with another car, object or as a result of flipping over. It also covers damage caused by potholes. Collision coverage is generally sold with a deductible of $250 to $1,000—the higher you make your deductible, the lower your premium. Even if you are at fault for the accident, your collision coverage will reimburse you for the costs of repairing your car, minus the deductible. If you're not at fault, your insurance company may try to recover the amount they paid you from the other driver’s insurance company. If they are successful, you'll also be reimbursed for the deductible.

5. Comprehensive

   This reimburses you for a loss due to theft or damage caused by something other than a collision with another car or object, such as fire, falling objects, missiles, explosion, earthquake, windstorm, hail, flood, vandalism, riot, or contact with animals such as birds or deer.
   Comprehensive is usually sold with a $100 to $300 deductible, however you may want to opt for a higher deductible amount as a way of lowering your premium.
   Comprehensive insurance will also reimburse you if your windshield is cracked or shattered. Some companies offer windsheild coverage with or without a deductible.
   States do not require collision or comprehensive insurance coverage, but if you have a car loan, the lender may require it.

6. Uninsured Motorist Coverage

   This will reimburse you, a member of your family, or a designated driver if one of you is hit by an uninsured or hit-and-run driver.
   Underinsured motorist insurance coverage comes is when an at-fault driver has insufficient insurance to pay for your total loss. This coverage will also protect you if you are hit as a pedestrian.

There are Penalties for Driving Without Auto Insurance

The cost of driving without auto insurance can vary from state to state, depending on the percentage of drivers who are uninsured in that state. For example, in Massachusetts residents can be charged from $500 to $5,000 in fines and possibly receive a one-year jail sentence. In Florida, Louisiana, Connecticut and New Jersey, drivers operating a vehicle without the state required minimum insurance, can have their vehicles impounded.

To find out the auto insurance state minimum and fines and penalties for driving without insurance in your state, visit the Department of Motor Vehicles' website for your state.

How to Budget For Auto Insurance

As you look for auto insurance, make sure to check if the insurer offers a 6-month or 12-month payment plan to help you manage your auto insurance payments better. In addition, many auto insurance providers offer a variety of discounts, including alumni discounts. So make sure to ask if your college or university is eligible for a discount, because every bit helps.

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