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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.

Auto insurance provides property, liability and medical coverage:

• Property coverage pays for damage to or theft of your car.
• Liability coverage pays for your legal responsibility to others for bodily injury or property damage.
• Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses.

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 to a year. Your insurance company should notify you by mail when it’s time to renew the policy and to pay your premium.

Your auto policy may include six coverages. Each coverage is priced separately.

NO! Almost every state requires you to have auto liability insurance. All states also have financial responsibility laws. This means that even in a state that does not require liability insurance, you need to have sufficient assets to pay claims if you cause an accident. If you don’t have enough assets, you must purchase at least the state minimum amount of insurance. But insurance exists to protect your assets. Trying to see how little you can get by with can be very shortsighted and dangerous.

If you lease a car, you still need to buy your own auto insurance policy. The auto dealer or bank that is financing the car will require you to buy collision and comprehensive coverage. You'll need to buy these coverages in addition to the others that may be mandatory in your state, such as auto liability insurance.

When renting a car, you need insurance. If you have adequate insurance on your own car, including collision and comprehensive, this may be enough.  But educate yourself to make sure you are covered in case of an accident while driving a rental vehicle.

The explosion in the deer population has lead to a continuing increase in deer-car collisions. This trend will only increase as the deer population grows and urban habitats continue to encroach upon rural environments.  Driiving defensively is key to keeping you safe.

There is a big difference between an insurance company canceling a policy and choosing not to renew it. Insurance companies cannot cancel a policy that has been in force for more than 60 days except when:

• You fail to pay the premium
  
• You have committed fraud or made serious misrepresentations on your application
  
• Your driver's license has been revoked or suspended.

Nonrenewal is a different matter. Either you or your insurance company can decide not to renew the policy when it expires. Depending on the state you live in, your insurance company must give you a certain number of days notice and explain the reason for not renewing before it drops your policy. If you think the reason is unfair or want a further explanation, call the insurance company’s consumer affairs division. If you don't get a satisfactory explanation, call your state insurance department.

The company may have decided to drop that particular line of insurance or to write fewer policies where you live, so the nonrenewal decision may not be because of something you did. On the other hand, if you did do something that raised the insurance company’s risk considerably, like driving drunk, the premium may rise or you may not have your policy renewed.

If your insurance company did not renew your policy, you will not necessarily be charged a higher premium at another insurance company

There are many insurance companies, so choosing between them can be a challenge. Here are the main points to keep in mind when selecting an insurance company:

You can buy insurance through your local insurance agent and through insurance companies that sell through their own employees, over the phone, by mail and over the Internet. Consult your state insurance department, the yellow pages of your phone book, and friends or relatives for the names of insurance companies doing business in your state. In most states, there are dozens, sometimes hundreds of companies to choose from, depending on the type of insurance you're looking for. You can go to our Find an Insurance Company tool for help.

The price you pay for your auto insurance can vary by hundreds of dollars, depending what type of car you have and the insurance company you buy your policy from. Here are some ways to save money.

Almost every state requires you to buy a minimum amount of liability coverage. Chances are that you will need more liability insurance than the state requires because accidents cost more than the minimum limits. If you’re found legally responsible for bills that are more than your insurance covers, you will have to pay the difference out of your own pocket. These costs could wipe you out!

There are many factors that influence the price you pay for auto insurance. The average American driver spends about $700 a year. Your premium may be higher or lower, depending on these factors.

Your agent will ask you what make and model cars you own, roughly how many miles you drive each year, and what kind of liability coverage you will need. The agent will also want to know how many people drive the cars, how old the drivers are, where you live, and driving records of each household member.

There may be several reasons why you can’t get insurance through traditional private insurance companies.  Find out what your options are to make sure you get the right coverage.

As soon as your teenager begins to drive, notify your insurance agent that there will be an additional driver in the house. Since teenagers are inexperienced drivers, they tend to get into a lot of accidents. This will, unfortunately, be reflected in higher insurance rates. If you have a daughter, you can expect your insurance to go up as much as 50 percent. A son will increase your car insurance by as much as 100 percent. Consider also raising liability limits or buying an umbrella liability policy for additional protection.

If you are ever sued, your standard homeowners or auto policy will provide you with some liability coverage, paying for judgements against you and your attorney's fees, up to a limit set in the policy. However, in our litigious society, you may want to have an extra layer of liability protection. That's what a personal umbrella liability policy provides.

Many drivers don't think about their insurance coverage until after they have an accident and call their insurance company to file a claim to help pay for car repairs, a rental car and other expenses.

Unfortunately, many insured drivers are surprised to find out that their auto insurance does not automatically cover the cost of a replacement rental car after an accident. Since the average car is in the repair shop for two weeks after an accident, it can cost as much as $500 to rent a replacement car. But, some insured drivers pay little or nothing to rent a car because of an inexpensive but often overlooked option known as rental reimbursement.

Your insurance company can't require you to use only certain kinds of auto repair parts. However, if the insurance company's rates are based on a certain type of part and you want something different, it can ask you to pay the difference if the part you want is more expensive.

It's important to file your claim as soon as possible after an accident.  Make sure you understand what your insurance company needs in order to file your claim properly.

There are several steps you can take if you are having trouble settling your claim.  It is important for you to understand what resources are available to you and how to deal with them.

You may be reluctant to file a claim because you fear that your premium will go up or your insurance will be canceled. Practices vary from company to company. In general, an insurer will increase your premium by specific percentages for each chargeable claim made against your policy above a specific dollar amount. A chargeable claim is one the insurer considers primarily your fault. The percentages and ceilings vary from company to company. These increases generally stay on your premium for three years following the claim.

There are several standard guidelines for determining the value of your car for insurance purposes. You and your insurer can refer to one of the Blue Books, which list the depreciated value of all new and used cars. One Blue Book is published by the National Association of Automobile Dealers ( http://www.nada.com ). The other is published by Kelley Blue Book of Irvine California ( http://www.kbb.com ).

As a policyholder, you have certain rights. Every state has laws protecting consumers. Your policy is a legal contract between you and your insurer. It defines your rights and obligations as well as the rights and obligations of the insurance company.

If you have any questions regarding your rights under the policy, talk to your insurance agent or company representative. You may also contact your state insurance department, state attorney general's office, or your state's consumer affairs department.

Your insurance company can't require you to use only certain kinds of auto repair parts. However, if the insurance company's rates are based on a certain type of part and you want something different, it can ask you to pay the difference if the part you want is more expensive.

If you’re like most people shopping for a new car, safety ranks high among things you're looking for. Every new car must meet certain federal safety standards, but that doesn’t mean that all cars are equally safe. There are still important safety differences, and some vehicles are safer than others. Many automakers offer safety features beyond the required federal minimums.

Knowing what to do if you are involved in an accident can save lives and also make the claims process easier.

If you are in an accident or your car breaks down, safety should be your first concern. Getting out of the car at a busy intersection or on a highway to change a tire or check damage from a fender bender is probably one of the worst things you can do. The Insurance Information Institute (I.I.I.) recommends the following precautions when your car breaks down:

If you have children it's important to make sure they are secured properly when you drive with them. They are almost always safer when riding in the back, in a car seat that is appropriate to their age and weight.  Using a car seat correctly can prevent injuries, but wrong usage is very common. Even a small mistake in how the seat is used can cause serious injury in a crash.

Drivers who are distracted by talking on a cell phone or dialing numbers while they are driving are causing more and more accidents. Some municipalities have banned using cell phones while driving because it has caused such a major problem.

Increasingly crowded highways and traffic backups cause many drivers to lose control and become extremely aggressive.

If you encounter aggressive drivers, don’t challenge them, and stay as far away as possible. You may want to take down the license plate number and report their behavior to police so they won’t hurt themselves or someone else.

People 55 years or older are less likely to drive aggressively or too fast. That’s the reason that most insurance companies offer discounts to drivers over 55.

Still, older drivers are more likely to have impaired hearing and slower reflexes, or to be using prescription drugs that might slow down their reaction time. Older drivers’ eyesight deteriorates, so they need more light to see, are more sensitive to glare and have a narrower peripheral field of vision. So if you are having problems driving at night or in difficult conditions, use common sense and try to avoid driving when it is dangerous. If you drive when you are not physically able to do so safely, your insurance company may not renew your coverage. You may also want to take a defensive driving class designed for seniors. Inform your insurer that you have taken the class and you may be eligible for a discount on your insurance premium.

Thousands of unsuspecting motorists are carjacked every year.  Educate yourself on how to minimize the threat of carjacking or theft by following the steps outlined in this article.

Driving in bad weather is a major cause of accidents. When you are driving, particularly on a long trip, make sure to stay tuned to radio reports about weather conditions. If you hear that an ice storm, hurricane, tornado, flood, hail or other severe weather is expected on the route you are taking or at your intended destination, change your travel plans. Whatever reason you have for going where you are going cannot be as important as saving your life.

If you are already in an area that is being hit by bad weather, don’t try to drive your way out of it. Seek shelter for both you and your car and wait for the storm to pass.