Auto insurance protects you against financial loss if you have an accident. It is a contract between you and the insurance company. You agree to pay the premium and the insurance company agrees to pay your losses as defined in your policy.
 

There are basically six different types of coverages. Some may be required by law. Others are optional. They are:
 

• Bodily injury liability - for injuries the policyholder causes to someone else.

• Medical payments or Personal Injury Protection (PIP) - for treatment of injuries to the driver and passengers of the policyholder’s car.

• Property damage liability - for damage the policyholder causes to someone else’s property.

• Collision - for damage to the policyholder’s car from a collision.

• Comprehensive - for damage to the policyholder’s car not involving a collision with another car (including damage from fire, explosions, earthquakes, floods, and riots), and theft.

• Uninsured motorists coverage - for costs resulting from an accident involving a hit-and-run driver or a driver who does not have insurance.

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An auto insurance policy is comprised of six different kinds of coverage. Most states require you to buy some, but not all, of these coverages. If you're financing a car, your lender may also have requirements.Most auto policies are for six months or a year. Your insurance company should notify you by mail when it's time to renew the policy and to pay your premium.