Answer:

The basic types of auto insurance coverages are:

1. bodily injury liability, which provides coverage for bodily injury claims from the people you might injure in an accident

2. property damage liability, which covers any property damages to third parties -- such as another person's car you damage -- which you cause or are responsible for

3. medical payments to the policy owner and other passengers in the policy owner’s car

4. uninsured and underinsured motorist coverage, which protects you when the negligent driver has no insurance or insufficient insurance (in most states, this covers only bodily injury losses -- though some states also include property damage losses)

5. physical damage covers damage to your car

a. collision, which covers losses to your car when you are involved in a collision

b. comprehensive, which covers most non-collision physical damage to your car (if your car is damaged in a storm, or a windshield breaks, for example).

In the most widespread auto insurance policy usually enters six types of car insurance coverage. They provide very big protection for the most frequent events which can occur to you and to which you would submit the requirement. But except six basic types of car insurance coverage, is some more others which can be carried to more specific events which can yield losses to your vehicle, or to certain requirements you can have, if you are involved as a result of accident. Most of these car insurance coverages are optional, and adding them to your policy will increase your auto insurance premium. Depending on the situations you encounter, having the right kind of coverage at the right time can save you a lot of stress and financial loss.

Liability Coverage

Auto insurance of a civil liability does not cover expenses which result from damage of your property, or as a result of damages received by you. It exists to pay for those things suffered by the other parties in an auto accident for which you are found to be at fault. In all states at legislative level the requirement of a minimum amount of liability coverage that you had legally the right to drive a vehicle. In some states, you can avoid buying car insurance liability coverage if you can prove you have the personal financial resources to cover the minimum requirements levied by the state. Liability car insurance covers you when driving any vehicle you own, or if you drive someone else's car with their permission.

Property Damage Liability

Property damage liability does not cover damage to your own property. It kicks in when you are found at fault in an accident, and your vehicle has damaged someone else's property. There are varying degrees of this type of coverage that will determine exactly what damages are covered. You will choose the amount of coverage when you buy the policy, and there may also be state-imposed minimums, especially if your vehicle is financed. The amount of coverage selected will determine the premium you pay for it. Property damage liability may include a deductible. Having this type of coverage protects you from paying out of pocket if you are found at fault for damage to anyone else's property.

Bodily Injury Liability

If you are found at fault in an accident that resulted in injury to another party, bodily injury liability coverage comes into play. It does not cover your own injuries, or those of any other driver included on your insurance policy. This coverage usually pays for: medical bills; physical therapy or rehabilitation; work time lost due to injury; legal representation for the other party; funeral costs; and possibly “pain and suffering,” which is determined by a court in the event of emotional or physical stress resulting from the accident. This is an important coverage to add to your policy. Medical expenses can skyrocket and cause tremendous financial hardship if you have to pay for them out of pocket.

Comprehensive Coverage

True to its name, comprehensive coverage applies to almost any type of loss that may occur, but not as a result of an auto accident. This can mean damage from severe weather such as tornadoes, hurricanes, or hail storms, or natural disasters such as earthquake, flood, or fire. It also applies if you hit an animal, or if your vehicle is vandalized or stolen. Even in the unlikely event that something falls on your car and damages it, comprehensive coverage will pay for the repairs. It's a good idea to pair comprehensive coverage with another type of coverage like collision to cover damage that does result from an accident.

Collision Coverage

Collision coverage is exactly what the name implies. It applies when your vehicle is involved in any kind of collision, whether it's with another vehicle, a building, a guardrail, or any other stationary object. In some cases, it also covers damage caused by the vehicle flipping over, or running over potholes. Collision coverage will pay for the repairs your vehicle needs after any of these incidents, or to replace your car altogether if the collision causes a total loss, also known as “totaling” the car. The most important thing to remember in this case is, you will be reimbursed for the current value of the vehicle, not the purchase price.

Fire and Theft Coverage

As the name states, this type of coverage applies when your vehicle is damaged or totaled as a result of fire, or if your car is stolen. If your car catches fire due to lightning or an explosion, this coverage will pay to repair or replace your vehicle. It also offers very specific coverage to include damaged resulting from the sinking, collision, derailment, burning, or stranding of a trailer that is transporting your car. It also offers some redundancies in coverage for things like floods, earthquakes, hail or wind damage, vandalism, or accidents caused by hitting an animal. It may also pay for damages resulting from an accident involving an uninsured driver, provided you are not at fault.

Physical Damage Coverage

Physical damage coverage is an umbrella under which three other types of coverage fall—fire and theft, comprehensive, and collision. If you're still making payments on your car, chances are either your lienholder and/or the state will require you to carry at least the minimum amount of physical damage coverage. Once your car is paid off, this coverage may become optional, but it's still a good thing to have to protect you against almost any sort of potential damage to your vehicle. It's especially important to have physical damage coverage if you own your car outright, and it's a luxury vehicle, or retains a high resale value.

Personal Injury Protection

Personal Injury Protection, or PIP, is sometimes called “no-fault coverage.” In many states, it's known as medical payment insurance. PIP is a complement to bodily injury liability coverage in that it covers approximately 80 percent of medical expenses including rehabilitation, funeral costs, and lost wages. Where it differs from bodily injury liability is that it covers you, your passengers, or anyone authorized to drive your vehicle. It also covers you and anyone else named on your policy when driving someone else's vehicle. This type of coverage is mandatory in 16 states. Your state's Department of Insurance, or your insurance agent, will be able to tell you if you are required to have it. If you live in a state where it's optional, you may want to consider adding it to your policy for extra protection.

Underinsured Driver Coverage

Also known as underinsured motorist coverage, or UIM, this type of coverage protects you if you're involved in an accident with a driver who carries the legal minimum amount of liability insurance, but no extra insurance to cover all your losses. It only applies when the other, underinsured driver is at fault. UIM will cover your medical expenses, property damage (in some states), and lost wages. It may also cover the expense of a rental car until your own vehicle is repaired. UIM is mandatory in some states, and optional in others. Check with your state's Department of Insurance, Department of Motor Vehicles, or your insurance agent for your state's requirements.

Uninsured Driver Coverage

Also called uninsured motorist coverage, or UM, it kicks in if you're involved in an accident with a driver who: carries no auto insurance whatsoever; carries insurance coverage that falls below the state's required minimums; is insured by a company that is financially unable to cover your losses; or hits you and flees the scene. Like UIM, it covers your medical expenses and those of your passengers. In some states, it also covers damage to your vehicle, and may cover reimbursement for a rental car. It is not mandatory in all states, so check the laws where you live.

Gap Insurance

Within the first three months of buying a new car, it loses as much as 30 percent of its value. If you were to be involved in an accident and your brand new car was totaled, or your new car was stolen, your regular auto insurance would not reimburse you for the entire amount you just financed. It would only cover the current value of the vehicle, but you would still be responsible for the remainder of the loan, or the “gap” between the value of the car and what you owe your lienholder. Because of this, gap insurance is also known as loan/lease insurance, or loan/lease payoff insurance. Some lenders may even require it when you finance a vehicle, so be prepared for this added expense when you buy a new car.

Rental Car Insurance

Many auto insurance policies will still cover you when you drive a rental car, but not all. If your policy doesn't include coverage for rental cars, this type of supplemental policy can be invaluable, especially if you travel frequently. It offers some of the same basic coverages as your standard auto policy, such as comprehensive and collision coverage, but in this instance, it's called a loss damage waiver (LDW), or a collision damage waiver (CDW). It also includes liability coverage for damage to property belonging to others, and personal accident coverage for injuries. Unique to rental car insurance is personal effects coverage (PEC), which reimburses you if your belongings are stolen from the car you're renting. Rental car insurance is not the same coverage that provides you with a rental car if your vehicle is damaged in an accident.

Pay-Per-Mile Coverage

This is a relatively new type of coverage that has been brought about by a few factors: interest in protecting the environment; consumers trying to cut costs; and the advent of telecommuting. Insurance companies have taken note of how consumers' driving habits have changed, and are adapting. Pay-per-mile coverage, also called pay-as-you-drive or usage-based insurance, basically means what the name suggests—you pay for insurance based on the number of miles you actually drive rather than an annual estimate. The insurance company may also take into account when, where, and possibly how you drive to determine your rates. A small GPS device is installed on your vehicle that provides the insurance company with this information, allowing them to accurately bill you on actual use rather than estimates. This is ideal for those who don't drive very often, don't drive during rush hours, drive in less densely populated areas, and demonstrate safe driving practices.