Auto or car insurance coverage has two parts. The first part is the liability section of the policy, it covers your financial responsibility for injuring others. Most states require some amount of liability coverage.

The second part of auto insurance covers the car itself. Comprehensive coverage reimburses losses from fire, theft or other perils and collision coverage pays to repair losses caused by an accident. Often collision coverage is mandated by leasing companies or banks. There are also ancillary medical, car rental and other coverages available, which vary by state.

Utilizing high deductibles on the physical damage coverages, can help reduce premiums. If you carry umbrella insurance, you must be sure that you carry the required amount of basic liability insurance to avoid a gap in coverage for a serious accident.