States have laws requiring drivers to carry auto insurance, sometimes referred to as financial responsibility laws. There are a number of ways a driver can show his ability to pay for injuries and damages. By a wide margin, auto insurance is the most common form of financial responsibility compliance and is the most frequently puchased form of insurance.
The two basic components of auto insurance coverage are liability and physical damage coverages. Liability coverage will pay for your negligence resulting in bodily injury and/or property damage. Claims for bodily injury could include claims for medical expenses, lost wages and consequential damages including pain and suffering. Property damage coverage pays for the damage you may do to the property of others. Liability coverage includes the cost of defending yourself against liability claims. A companion coverage that is of great value is uninsured motorist coverage. This coverage protects you if you are injured by an uninsured driver.
Physical damage coverage can provide collision and/or comprehensive coverage. Collision coverage provides payment for damage to your automobile as the result of collision with an object. Comprehensive coverage pays for damage to your auto by causes other than collision. Collision and comprehensive coverages are optional and not required by law. If you have alien on the automobile, the lender will require you carry these two coverages.