Are you about to purchase a car for the first time? It’s likely you are overwhelmed with your car insurance options. Or maybe you already own a car but never really took the time to thoroughly read your auto insurance policy to determine what kind of coverage you actually have, if it’s the right coverage for you, and if it’s really enough.
Whatever your situation, the American Automobile Association (AAA) advises all drivers to know the basics of an auto insurance policy before they find themselves in an auto accident and underinsured. Read on for a breakdown of the different auto insurance coverages available, courtesy of AAA.

1. Liability (mandatory in most states): Liability coverage protects you against the cost of damage and injury that you cause to another in an auto accident. It’s made up of two different coverages: bodily injury liability, which protects you from the cost of personal injury to others; and property damage liability, which protects you from the cost of damage you cause to any physical property. In an auto insurance policy, it is described by three numbers (i.e. 250/500/100) — usually called the split limits of liability insurance — which, in the example here, would mean you’d be covered for up to $250,000 worth of bodily injury caused to another person; $500,000 for bodily injuries caused to everyone; and $100,000 worth of property damage.
Deciding how much additional coverage to take (if any) is up to you. According to the AAA, purchase coverage equal to the net asset value that you have available and could reasonably lose in the event of causing damages to others.

2. Medical payments (optional): Pays — up to the policy limit per person — for medical expenses regardless of fault for you and the occupants of your covered vehicle who are injured in an auto accident. Also protects you and the relatives living in your household if they are injured in someone else’s car or by a car as pedestrians. All reasonable and necessary medical expenses are covered within the period of time specified in the policy. In many states, this coverage is included under personal injury protection or no fault coverage.

3. Underinsured and Uninsured (optional in some states and required in others): Both protect you against injury caused in an auto accident where the at-fault driver’s liability car insurance coverage is inadequate. Though often lumped together, they are two distinct policies. Uninsured motorist insurance is needed when the other driver has no liability coverage. Underinsured motorist coverage pays for the cost of your injuries that exceed the other driver’s coverage maximum. Coverages and limits vary by state.

4. Collision (optional): Provides the payment to fix your car, or pay its actual cash value if it is deemed to be a total loss, if it is overturned or damaged in a collision with another car or object. Also pays for damages to your covered vehicle regardless of who is at fault, but is subject to a deductible. (If you’re driving a car purchased from a dealership or financed through a lender, they may require you to carry collision.)

5. Comprehensive (optional): Similar to collision, but differs in that it covers damage caused to your vehicle by any unknown party or “act of God,” such as vandalism, a flood or hurricane, theft, and fire. Provides repair to your car or pays its actual cash value if the car is deemed to be a total loss, less your deductible. Does not cover wear and tear, engine failure, or other mechanical difficulties. (When you are financing your car, comprehensive coverage may be required by the lienholder.)

7. Auto endorsements (optional): Policy extras that many drivers value for the security and convenience they provide. It’s up to you to weigh their benefits versus cost. Coverages include:
• Auto towing insurance — pays for towing your car anytime you need it.
• Auto glass insurance — gives you a lower deductible or no deductible when it comes to repairing any broken window on your car.
• Daily rental insurance — covers the cost of a rental car while your car is being repaired as a result of a collision or comprehensive loss. (You’ll need both comprehensive and collision insurance to qualify.)
• Emergency roadside assistance — covers repairs done on the spot. Changing a flat roadside may be covered, but you’ll have to pay for any repairs at the garage. It is often combined with auto towing coverage and called roadside emergency towing insurance.