You never think it’s going to happen to you, until it happens. Car accidents occur every 18 seconds in the United States and road crashes cost the country almost $230 billion annually, averaging to about $820 per person. Automobile insurance is the fundamental must-have for any car owner since it contains coverage protecting you financially if you cause injuries or damage to other people’s properties during an accident. This insurance is mandatory in most states, but some other rules may apply differently to each state. A contract between you and the insurance company, automobile insurance  is a cost you pay in order to let the company protect you financially in the event of a car accident.

The terms, ‘premium’ and ‘deductible’ are terms you need to familiarize with when it comes to car insurance. The basic automobile insurance includes property coverage that pays for damage or theft of your automobile; liability coverage includes legal responsibility towards any injury or damage done to others; lastly, medical coverage pays for treatment of “injuries, rehabilitation and sometimes lost wages and funeral expenses”.

There are more types of different coverage, which may be priced differently. This coverage includes: Bodily Injury Liability pays for anything that results from physical injury caused by a car accident such as medical bills, lost wages, pain, and even funeral expenses in extreme cases. Property Damage Liability pays for damage on the other vehicle and covers cost to repair as well as damage on the streets you might have caused such as street lamp, fence or building. Collision pays for damage to the car as a result of a collision with another vehicle.

Even if you cause the collision, the coverage “will reimburse you for the cost of fixing your car once you have paid the out-of-pocket deductible amount.” If you didn’t cause the collision, “your insurance company can seek reimbursement from another driver to cover the cost of repairs to your vehicle”. Comprehensive pays for non-collision losses such as theft, vandalism, fires, falling objects, earthquakes and storms or contact with animals.