It is advisable that you purchase adequate amount of coverage instead of buying a cheap insurance policy. You should also know that driving without car insurance is illegal.

Auto insurance provides different types of coverage. Each coverage is unique and has its own premium. If you understand your car insurance policy and its coverage limits then you will be more relaxed incase anything unfortunate happens. Read on to know about 4 types of auto insurance coverage.

1. Liability coverage: It is a mandatory coverage. Liability coverage pays for the damage that you cause to others. This includes any personal or property damage. The coverage takes care of your medical bills and also pays to replace or repair others property that you have damaged. The policy also pays if you are sued after an accident. All states require that you purchase a minimum amount of liability coverage.

2. Collision and comprehensive coverage: Unlike liability coverage that pays the other person, collision and comprehensive coverage pays you. In the event of an accident it pays to repair your own vehicle. Incase the cost of repair exceeds a particular amount, which could be 70% of the total value of the car, the insurance company pays the actual value of the vehicle. This insurance coverage is not mandatory in any state.

3. Medical payments: This policy pays for your medical expenses and also bears the cost of medical treatment of the passengers in case of an accident. This coverage pays irrespective of who caused the accident. It not only covers medical expenses but also funeral expenses in case of a fatal accident.

4. Uninsured/underinsured motorist coverage: This coverage pays your medical expenses if your car meets with an accident with the car of an uninsured driver. Underinsured coverage pays for your medical treatment in those cases when an underinsured driver is responsible for an accident.

Auto insurance thus offers different types of coverage that you can choose from. Some are mandatory while others are not. However, all types of coverage protect you financially and help in times of any unforeseen situation.

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