• Car insurance can help prevent an accident from turning into a financial crisis.car crash image by dawn from Fotolia.com
  
  Car insurance is something that every vehicle owner should have. Besides providing financial protection in the event of an accident or vehicle theft, car insurance can help protect a driver from uninsured motorists and may also pay medical expenses that come as the result of a crash. In addition, having car insurance is usually required by law.
  
  

Who needs car insurance?

• Individual state laws outline car insurance requirements. In the United States, every vehicle owner is responsible for purchasing car insurance before operating a vehicle on public roads. Uninsured drivers who are involved in an accident or who are stopped for a traffic violation face penalties including fines, loss of license and vehicle impoundment.
  
  Many states require proof of insurance before a driver can register a new or used vehicle. However, because drivers can also cancel an insurance policy at any time, this stipulation does not adequately ensure that all drivers have valid insurance at all times.
  
  

Who sells car insurance?

• Most major national insurance companies offer extensive car insurance options. Often drivers may combine car insurance with other forms of insurance, such as homeowners insurance, renters insurance or life insurance to receive package discounts through the insurer.
  
  In addition, many smaller insurance companies offer only car insurance for certain states. These companies, which feature less extensive service histories and fewer types of insurance offerings, may offer lower rates and more basic insurance coverage than major insurers.
  
  

Why does car insurance cost so much?

• Car insurance companies use several factors to determine their rates. These include a driver's age and gender, which help determine the statistical probability that a driver will be involved in an accident and need to make a claim. Other factors include the make, model and age of the vehicle, the location where the driver parks at night (which will determine the safety of the neighborhood and the likelihood of theft or vandalism) and how many miles the driver expects to put on the vehicle each year. A driver's accident record is also an important factor; many insurance companies offer good driver discounts for drivers who take a safe driving course or have a clean accident record for several years.
  
  

What are the types of car insurance?

• Car insurance comes in several major types, each of which provides coverage in certain situations. Liability insurance pays vehicle owners for damage they cause to another driver's vehicle in an accident. Collision insurance covers damage to the insurance policy holder's own vehicle caused in an accident, while comprehensive coverage applies to damage not caused during an accident (such as fire or vandalism). Personal injury insurance covers medical bills or pays out in the event of another driver's death that the insured driver causes. Uninsured motorist insurance applies when the insured driver is the victim of an accident caused by a driver who lacks adequate insurance (or any insurance at all) to pay for the damages.