American drivers are required by law to have auto insurance. The purpose is to make sure anyone involved in an accident will receive the financial help they need. But while it is a common legal requirement, each state has different requirements with which residents must comply. Some drivers also purchase more than the minimum amount of coverage required. If you are in the market for auto insurance, make sure to at least get liability coverage. Anything more than that is optional.
When purchasing auto insurance, your main choices include liability, collision and comprehensive coverage. Liability is the most common because it is required by all states. As long as you have liability, then you can legally drive on public roads. Drivers are financially liable for any damage they cause to others. This can be expensive as it includes property damage, vehicle damage, and personal injury. Liability pays others for the damage you cause, but only up to policy limits. Anything beyond that will be your responsibility, so you might want to increase your amount of liability coverage.
Collision and comprehensive coverage is for your benefits as the driver and vehicle owner. When a collision occurs, collision coverage pays to repair or replace your auto. Comprehensive includes collision as well as coverage for fire, theft, water damage, and more. There may also be options for personal injury, rental car reimbursement, and more.
The benefit of auto insurance is it helps you financially following accidents. The costs associated with an accident can be overwhelming, so it helps to have help.