Car insurance can be confusing, but understanding the basics is crucial. Different coverage types apply to specific situations. Most states require car owners to have insurance for legal driving. With a good grasp of key terms, you can make informed decisions and keep costs low.

Coverage types like bodily injury liability help pay for injuries to others in accidents. Property damage liability covers repairs to someone else’s property. Liability limits determine maximum payouts. Having a minimum level of insurance is essential for legal driving in most states.

Comprehensive insurance pays for non-collision damage like theft or vandalism. Collision insurance covers damage from collisions. Gap insurance covers the difference between a car’s value and what is owed on a loan in a total loss scenario. Personal injury protection covers injury-related expenses.

Understanding terms like deductible, premium, and depreciation is crucial. A lapse in insurance coverage can lead to financial risks. Liability and negligence are important legal concepts. Subrogation allows insurance companies to pursue damages from third parties. Be informed to make the best insurance decisions.

Read more at Yahoo Finance: Auto insurance terms you need to know