Most states have versions of financial responsibility laws that require proof that you are financially able to pay for any damage that you may cause while driving. Insurance policies are the most common method of complying with these laws. Drivers are typically required to carry liability insurance at a minimum limit that varies by state.
Bodily Injury Liability.
Covers damage or injury that you may cause to others. The key is that it involves your being held financially responsible for injuries to other people as a result of the way you operated your car. This coverage does not apply to your injuries.
Covers damage that you cause to the property of others. This involves your being held financially responsible for property you damage or destroy as a result of the way you operated your car. This coverage does not apply to damage to your property.
Uninsured motorist coverage
Pays for your expenses that result from an accident caused by an uninsured driver. This uninsured driver must be the one who is responsible for causing the loss. The definition of an uninsured driver includes: a person who has no insurance; a person who can't be located ("hit and run drivers"); and a person who has insurance, but their insurance company is financially incapable to provide coverage. IMPORTANT: The amount of protection under this coverage may depend on state law.
Underinsured motorist coverage
Although similar to uninsured motorist, this coverage is for injuries caused by a driver who is inadequately insured. Basically, it operates as excess insurance, paying for your expenses that exceed the amount of insurance protection available from the other driver's policy.
Covers damage to your own vehicle. The damage has to be the result of your vehicle running into (colliding with) another object or vehicle or your vehicle overturning.
Comprehensive or Other Than Collision coverage
Also covers damage to your own vehicle. The damage has to be the result of a specific cause of loss including fire, theft, vandalism, hitting an animal, vandalism, earthquake, flood or hail.Remember that both Collision and Other Than Collision coverages are subject to deductibles, meaning the initial dollar amount of a loss which is paid by you, the policy owner.
Personal Injury Protection or Medical Payments
Covers medical expenses for injuries to you and your passengers while occupying a covered vehicle, subject to a "per person" limit. It may also cover you and members of your household if struck by an automobile, as a pedestrian or while riding a bicycle. The main difference between Personal Injury Protection (PIP) and Medical Payments (Med Pay) is that PIP also covers Loss of Income or Replacement of Essential Services.
Towing and Labor coverage
Helps pay for your costs due to a disabled car. It could help pay for the car to be towed to a service station or for any repair that occurs at the location of the car's breakdown. Coverage is limited to labor and not the cost of any necessary parts.
Reimburses you for the expense of renting a car as a temporary replacement. The car being replaced must be an insured car that's unavailable for use because of that car being damaged or destroyed due to a covered cause of loss.