Auto insurance protects you against financial loss if you have an accident. It is a contract between you and the insurance company. You agree to pay the premium and the insurance company agrees to pay your losses as defined in your policy.

Auto insurance provides property, liability and medical coverage:

* Property coverage pays for damage to or theft of your car.

* Liability coverage pays for your legal responsibility to others for bodily injury or property damage. * Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses.

How is your auto insurance policy price determined?

The average auto insurance policy price is derived from a variety of factors.

Many of these variables are common knowledge and make sense for the most part.

it’s always a good idea to refresh yourself with what insurance companies are looking for when determining how much your coverage will cost.

*Driving Record *Coverage Amount *Age *Vehicle Model and Driving Mileage *Your Residence

What auto insurance coverage?

What types of auto insurance coverage to choose from?

*Liability: coverage is the primary – and usually mandatory – part of the auto insurance equation. Liability means what the word implies: it saves your bank balance when you're liable for destroying someone else's car or body parts. *collision: which is not to be confused with liability. Liability pays the bills for damage you cause to the other party; collision covers damage done to your own car. If someone else totals it, his liability pays for repairs (assuming he doesn't hit and run), so if you can follow the aforementioned tip of not crashing, you generally shouldn't need collision. In simplified terms, buying collision insurance can be thought of paying someone to save you from yourself. The safer you drive, the less necessary it becomes. *Uninsured/underinsured motorist coverage, required by most states, is always a good idea knowing that 17% of drivers out there don't have any insurance, and a lot of the rest probably skimp by on the sometimes-inadequate state minimums. This usually varies in tandem with the body injury part of liability. Don't sweat it too much, as the premium is a mere fraction of liability. *Personal Injury Protection (PIP) or Medical Payments (MedPay) provides reimbursement for medical bills of you and your passengers regardless of who's at fault, and for resulting lost wages. This is an option – one that those with good health insurance plans might not want to exercise. *Rental reimbursement simply pays for the cost of renting a car. Even if it costs $30 a year, why bother? $30 basically buys a one-day car rental, so it's hardly worth it unless you get stranded a lot. (In which case, you might want to switch cars.) If you own a second car, this is completely unnecessary. The same reasoning applies to towing insurance and the like. *GAP insurance, which covers the difference between what the car is actually worth and what you owe. This might be an attractive proposition for a car that with heavy depreciation, which is a symptom suffered by young cars in general. A $20,000 car might drop to $12,000 in market value after a year. If you total the car at that point, $12,000 is all you'll get from your insurance company, yet you're still obligated to the $16,000 in payments that still remains. Obviously, $4,000 is one gap you'll want closed.

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