Required Auto Insurance Coverages
To make things easier to understand, it is important to note that there are two required auto insurance coverages.  These are the liability coverage and the collision or comprehensive coverage.

Liability insurance coverage is just what it literally sounds like -- it covers the person who is liable for the accident. When there is accident, it is the driver’s responsibility, the one who caused the accident, to pay for the damages caused to other drivers, the vehicles and any other properties  damaged due to the accident. Liability insurance covers a certain amount of  costs depending on the amount  agreed upon by the driver and the auto insurance company.

Liability insurance usually covers the owner of the vehicle and any other person who has permission to drive the vehicle. It can also help to pay court fees, bail bonds and emergency first aid. Most states require liability insurance. In the case that a state does not, the driver must prove that he is financially capable of, out of his own pocket, to cover damages caused by an accident. Insurance Agents refer to this as "fiscal responsibility." If a driver can not provide proof of financial responsibility, then he or she must purchase liability insurance.
 
On the other hand, collision coverage covers the cost of damages in the event the vehicle gets into  a collision with another vehicle, or any other object. If damage to the car costs more than the car itself, the driver then receives reimbursement of the cost of the car and pays for the remaining repairs out of his or her own pocket. Actual value means what the car is worth at the time of the accident. It takes into account the depreciation of the vehicle and its current condition.

Optional Auto Insurance Coverages
Bodily injury  refers to health insurance coverages. There are some states that require coverage for injuries, while other states consider this optional. Coverage of injury covers the costs of damage to persons involved in an accident, including the person who caused this accident. It covers the driver, passengers and all the people in the other car. Coverage of injury may be sold "per person" limits or limits “per accident.”

Underinsured or uninsured coverage, on the other hand, pays for the  claims filed after an accident in which one of the drivers (usually the person who caused the accident) does not have appropriate insurance coverage. In such cases, uninsured or underinsured motorist coverage fills the void, making it unnecessary pay something out of the pocket.

Whatever the insurance package the car owner decides on, it is imperative that the policy meets with state requirements, since each state’s requirement is different. Drivers must take it upon themselves to do further research, this helps them to be fully prepared in the event of a car accident.