Auto insurance is mandatory in most states, however, there are some states that have easier “proof of financial responsibility laws” to allow you to get around that. These laws make auto insurance recommended, rather than mandatory. However, if you want to protect your finances, it is smart to at least get liability insurance. Liability insurance, as well as collision insurance, protects your finances in the case you have an accident. This insurance will either pay for your own car repairs or those of the other party. It will also replace a vehicle if it is considered “totaled” by the insurance company.
The key is to look at your insurance policy. On the declarations page, you should find your coverage limits and what is covered by the insurance policy. This ensures that you are fully informed about what type of coverage you have bought, as well as what the deductible is and the payout limits are.
Basically there are two types of auto insurance. Liability is the first and most important type, as it offers coverage that normally complies with the state minimums. It will cover you if you are at fault in an accident. The second type is known as comprehensive or collision insurance and it offers additional coverage, including car repairs, no matter who is at fault and personal item reimbursement if they are lost or damaged.