Automobile insurance is required in all 50 states, although each state sets its minimum coverage requirements. The type of car insurance that is mandated is known as liability, which will pay for damages caused by your actions. Those wanting to insure their own vehicles from possible damage caused by themselves, or others, will typically look at collision and comprehensive coverage.
History
Automobile insurance has been around since the late 1890s, with the first policy in the United States issued in 1898. Massachusetts became the first state to require car insurance in 1927.
Function
Collision will cover the damage done to your car when you hit another vehicle or object, or are hit by another vehicle or object. In a standard auto insurance policy, this is phrased as "the upset of the covered auto or its impact with another vehicle or object," according to Online Auto Insurance. Comprehensive essentially covers damages caused to your vehicle by any other means, such as fire, theft, hail or animals.
Significance
If you are making installment payments on a car loan or are leasing a car you will most likely be required to purchase comprehensive and collision insurance, along with liability.
Considerations
Your insurance company may not give you the option to purchase collision or comprehensive individually and may require you to purchase them as a tandem or not at all. Additionally, you may be asked to carry the same deductible for both.
Warning
A number of extra items are not covered by many comprehensive insurance policies. These are often electronic items, such as CD players, stereos, CB radios or video players that are not permanently installed. Additionally, the media used for stereo equipment, such as cassettes or CDs may be excluded from being covered. It's best to read through your policy for the items that will not be covered.
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