These links examines the six basic coverages, explains what to do in an accident, and provides a sample coverage page. The factors for determining insurance rates are listed as well and so are various discounts that may be available. It will also explain how to determine how much coverage you really need.

• HOW RATES ARE DETERMINED
• RATE COMPARISON FORM
• SAMPLE INSURANCE COVERAGE PAGE
• WHAT TO DO IN AN ACCIDENT

• BODILY INJURY LIABILITY: This coverage pays medical costs, loss of income, and compensation for pain and suffering of others who may have been injured in an auto accident that was your fault. It also pays for your legal defense fees and is mandatory in most states.
• PROPERTY DAMAGE LIABILITY: This pays claims against you and your legal defense costs if your car damages another person's vehicle or property. This type of coverage is also mandatory in most states.
• MEDICAL PAYMENTS COVERAGE: This coverage will pay for any necessary doctor, hospital, and funeral expenses for you and your passengers injured in an accident. These payments are available regardless of who is at fault. Payments are usually limited to two to three years after the accident. This is an optional coverage in most states who don't have no-fault insurance.
• UNINSURED/UNDERINSURED MOTORIST PROTECTION: This pays for the cost of injuries or death sustained by your or your passengers in an accident caused by an uninsured motorist or a hit-and-run driver. It also covers you and family members as pedestrians. Underinsured Motorists coverage pays when you are injured as a result of the negligence of someone who has insurance, but their limits are not high enough.
• COLLISION: The collision coverage pays for damage to your car caused by a collison or a rollover. This is required insurance if you have a car loan.
• COMPREHENSIVE PHYSICAL DAMAGE COVERAGE: This pays for damage to your car resulting from theft, fire, vandalism, flooding, hail, or other perils (but not damage from collision or rollovers). It is also a required coverage if there is a car loan.

 
 

• RENTAL REIMBURSEMENT: This is an optional coverage that pays up to a specified amount for rental car charges while your own car is being repaired for damage covered under your policy. If you cannot afford the cost of renting a car yourself, and cannot be without a car for any period of time, this might be worthwhile coverage. (Comprehensive insurance generally covers up to specifiedf daily limits for a rental car if yours is stolen.)
• TOWING AND LABOR: This is usually available for an additional premium of $4 to $15 annually. It covers some costs incurred for services rendered at the place of the breakdown, or for towing to a repair shop. It generally also covers the delivery of gas, oil or a battery. If you lock the keys in the car or need a tire changed, it may also be included under this service, but check when you add it to your policy. These services are all availlable if you're a member of AAA so if you have one, don't get the other.
• UMBRELLA LIABILIY: This is a separate policy that provides an additional $1 million or more in liability coverage beyond your other liability insurance. Because this is a secondary coverage, paying after you exhaust other coverage, the umbrella policies cost less than you might expect.  You can often buy a $1 million umbrella policy for about $200 to $250 a year. This excess liability coverage applies to your homeowner's, renter's, or boat liability too.

 

        Probably the most important parts of your auto policy are the liability coverages, which protect you from "third-party" claims. Insurers consider you and family members living in your house as "first parties" and your insurer is the "second party". With liability insurance, the first party is protected from claims by a third party through a policy with the second party.

        Liability insurance is usually sold with split limits, which would be expressed as a series of numbers (i.e.-$100,000/$200,000/ $50,000). The first number is the maximum amount the company will pay for bodily injuries to any one person in an accident. The second number is the maximum amount it will pay for all bodily injuries, no matter how many people are hurt in the accident. The third number is the maximum amount it will pay for damage to another's property in an accident. If you should be held liable for amounts greater than the limits you choose, you're responsible for the difference.

        There's no way to predict what an accident might cost you, but there are some general rules. The potential cost would be higher if you  seriously injure or kill someone else, but the costs would also be higher if you are guilty of negligent or drunk driving. Your costs are also likely to be higher if you live in a state known for high jury awards for damages.

        To determine how much liability protection you need, first figure your net worth. Then set your liability limits high enough to protect your assets. Selecting coverage limits is the most difficult part of buying auto insurance. The key is to prepare for the worst and hope for the best.