When you buy an auto insurance policy, you are buying the right to claim any losses you suffer in different situations. The more elements you include, the higher the premium rate.
Liability — in all but three states, this is mandatory. It pays out to anyone you injure in an accident. Most auto insurance policies cover you when you are driving a vehicle belonging to someone else so long as you have the owner's permission.
Property damage — this adds to the liability protection and pays out when you damage property belonging to someone else in an accident.
Bodily injury — this also adds to liability protection and pays the medical expenses of those you injure in an accident. It can also pay out on damages claims against for the pain and suffering caused, loss of earnings, and so on. In the worst cases, it pays the funeral costs of those who die.
Collision — this pays your own losses if your own vehicle is damaged in an accident. Remember this only covers the vehicle you own. You will need separate cover if you rent a vehicle.
Comprehensive — this pays your own losses if your vehicle is damaged or lost but not in an accident, e.g. by the weather, when stolen, and so on.
Fire and theft — is a limited form of comprehensive cover and only pays out if your vehicle is stolen or damaged in a fire, e.g. when garaged or hit by lightning.
Personal injury protection — this covers your own treatment, the cost of rehabilitation and, depending on the terms, your own loss of wages. It can also cover your passengers and anyone driving your vehicle with your permission. This cover is mandatory in sixteen states.
Uninsured and underinsured — if you are involved in an accident and the other driver either has no auto insurance or only has the bare minimum in terms of amount, this covers your own losses and medical expenses, or tops up the inadequate amount payable by the other policyholder.
Gap — when you take out an auto loan, this policy covers any gap that might arise between the amount owing on the loan and the claim payout if the vehicle is totaled. Current value is often less than the amount owing.
Rental and incidentals — following an accident, you may want to rent an alternate vehicle while yours is being repaired. There may also be towing, storage and other charges to pay.