1. What is liability coverage?
Liability coverage insures you against the cost of injury and damage you cause to another in an automobile accident. It’s made up of two policies, bodily injury liability, and property damage liability. Auto liability insurance is required in virtually every state.

2. What is bodily injury coverage?
It’s the part of liability coverage that insures you against the injury you cause to others in an auto accident. It consists of two figures. One limits the cost of injury coverage per person injured, and the second limits the total dollar amount of injury coverage (for everyone injured.) This is a very important policy.

3. What is property damage coverage?
It’s the part of liability coverage that insures you against the cost of damage to another’s property caused by you in an automobile accident. “Property” includes other cars, houses, fences, telephone poles, etc.

4. What is medical payments coverage?
This policy pays the medical bills of the covered driver, family members, and passengers when injured in an accident, regardless of who was at fault. This coverage is required in some states, but not in others.

5. What is personal injury protection (PIP)?
PIP is similar to medical payments coverage, only it usually covers a broader range of events, including medical bills, lost wages, loss of services, etc. It is required in most no fault states.

6. What is uninsured motorist coverage
This policy covers the cost of injury or damage caused by another driver who is not insured. It covers the policy holder, authorized drivers, and any passengers. It usually consists of separate limits for bodily injury and property damage. This policy is required in some states.

7. What is underinsured motorists coverage?
This policy pays for injuries and damage caused to the policy holder by a driver with inadequate insurance. It typically pays the difference between the at-fault driver’s liability limit and the holder’s policy limit. There are separate limits for property damage and bodily injury liability. This coverage is sometimes combined with uninsured motorist coverage under one policy, and may be required in some states.

8. What is collision coverage?
This policy helps pay for repairs or fair market replacement cost if your car is damaged in an accident caused by you or an authorized driver. This policy is always optional.

9. What is comprehensive coverage?
This policy covers the cost of repairs to or replacement of your vehicle should it be stolen, vandalized, struck in a hit-and-run, or damaged by an “act of God.” Covered events vary from policy to policy but usually include fire, flood, and falling objects. This policy is always optional.

10. What is a deductible?
It’s the amount of money that you agree to pay before a certain auto insurance policy kicks in. Deductibles are designed to cut down on insurance costs by eliminating small or frivolous claims. The higher the deductible you’re willing to pay, the lower the premium you earn. Collision and comprehensive policies almost always carry deductibles, and sometimes PIP and medical payments policies do too.

11. How much will adding a teenage driver to my policy cost?
Probably a lot. Teens fall into the age group that statistically drives the most dangerously. However, you might be able to earn a discount if your teen is a good student or drives an older model car. (And if the car is old enough, you won’t need to carry collision and comprehensive on it, further reducing costs.) Learn more about teen car insurance.

12. How will having a kid in college affect my insurance rates?
If your kid is attending a school over 100 miles away without a car, your premium should decrease. However, if they’ll be bringing a car with them, they should probably be listed as the vehicle’s primary driver, and that may cause a slight increase in your premium.

13. Will my policy cover me if I rent a car?
You’ll usually automatically have the same level of coverage on the rental car as you do on your standard policy. (Check your policy for details.) Paying for the rental car with a credit card can offer even more protection. However, be aware, that in the event of an accident, the rental company may charge additional administrative, loss of income, and replacement cost fees that your standard policy won’t cover. So buy the additonal insurance if it makes you more comfortable.

14. Am I covered for a car accident that happens in another state?
An American car insurance policy is good throughout the country. However, some policies change their coverage a little depending where you have an accident. (Michigan does this, for example.)