In the past, if a person wanted to purchase all the coverage that the modern day automobile insurance policy provides, he or she would have had to purchase at least four separate policies. Changes in the laws that regulate the sale of insurance now allow the insurance industry to sell policies that combine the separate coverages into one all encompassing policy. The main advantages of combining the various coverages are lower expenses, and therefore a lower cost to consumers, and the convenience of being able to purchase the property, automobile liability and other coverages in a single policy. The standard private passenger automobile insurance policy can have up to four different coverages. Only the first coverage is standard - the remaining three coverages are optional.

Bodily Injury & Property Damage (BI/PD) provides liability coverage that protects the insured from lawsuits arising from either the negligent operation or ownership of a covered automobile. There are two coverages provided in Part A - bodily injury liability (BI) and property damage liability (PD).

1. BI provides coverage for the bodily injury claims of people you negligently injure in an accident.
2. PD provides coverage for any third party property damage claims that the courts determine you are

Medical Coverage (MED) provides medical payments to the policy owner and any other passengers in the car when there is an accident.

Uninsured Motorist Liability Bodily Injury (UMBI) provides uninsured motorist and underinsured motorist protection for the policy owner. Both coverages are designed to compensate the injured policy owner when the negligent driver has an insufficient amount of liability insurance under his/her own policy. Typically, UMBI covers only bodily injury losses, but property damage losses are included in some states. Comprehensive and collision (Comp/Coll) covers damages to your car when it is involved in an accident.

Most states have enacted mandatory insurance laws that require drivers to have at least some automobile liability insurance, BI/PD. These laws were enacted to ensure that victims of automobile accidents receive compensation when their losses are caused by the actions of another individual who was negligent. Except for the minimum liability coverages that you may be required to purchase, many people with older cars decide not to purchase any of the physical damage coverages. It is often the case that the cost of repairing the damages to an older car is greater than its value. In these cases, your insurer will usually just "total" the car and give you a check for the car's market value less the deductible. Many people forgo the Comp/Coll coverages because of the relatively low values of their automobiles.

Whenever you knowingly loan your car to a friend or an associate, he or she may be covered under your automobile insurance policy. In fact, even if you do not give explicit permission each time a person borrows your car, they may be covered under your automobile insurance policy as long they had a reasonable belief that you would have given them permission to drive the car. If you are carrying a named-operator policy, only the individuals named on the policy are covered on your car with your policy. Although often less expensive, a named operator policy should be clearly disclosed before you purchase the policy.

The answer to this question is not as easy as it once was. In the not-too-distant past, most automobile insurance policies would extend coverage to rental cars whenever you rented one. This is not quite true anymore. In most cases, your personal automobile insurance policy will provide coverage only when you are renting a car on vacation. Many insurance companies no longer extend personal automobile insurance coverage when you are traveling on business. The best way to find out what rental car coverage you have under your automobile policy is to call your insurance company.

Both collision and comprehensive are often referred to as Comp/Collision (Comp/Coll) coverage. Collision is defined as losses you incur when your automobile collides with another car or object. For example, if you hit a car in a parking lot, the damages to your car will be paid under your collision coverage. Comprehensive provides coverage for most other direct physical damage losses you could incur. For example, damage to your car from a hailstorm will be covered under your comprehensive coverage. It is important to know the differences between the collision and comprehensive coverages for a couple of reasons. First, in order to make an informed purchasing decision about these optional coverages, you need to know the differences between them. Second, the deductibles under the collision and comprehensive coverages are often different in amount.

The duties you need to perform after you have an accident are prescribed both by state law and by terms of your contract.

• Obviously, the first thing you should do is make sure everyone is all right and call an ambulance if one is needed.
• For most accidents in most states, the police should be notified.
• Third, you should give the other driver(s) involved in the accident your name, address, telephone number, and the name of your insurance company and/or your insurance agent. You also need to get this same information from the other driver(s).
• At the first opportunity, you should contact either your insurance agent or your insurance company to notify them that you have been involved in an accident.
• Finally, there are a number of conditions in the insurance contract that you must satisfy in order to receive compensation from your insurer. For example, you need to cooperate with your insurer during any investigation undertaken during the claims settlement process.

Failure to complete any of these actions can, and sometimes does, result in non-payment by your insurance company for losses that otherwise would have been covered.

Current school of thought amongst actuaries and statisticians who have studied the claiming behavior of people involved in accidents is that people who have either had an accident or received a ticket recently are more likely to have another accident in the next couple of years than people whose recent driving records have been incident free. Another school of thought exists which indicates that a driver with a recent accident or violation is likely to be more careful and thus more desirable as an insured. There can be few assumptions made with regard to this question and thus the need to continually assess your insurance costs and be shopping around. Insurance companies use this information not to punish people who have had an accident, but to charge them the premium that most accurately reflects their likelihood of having an accident. People who are more likely to have accidents should reasonably be expected to pay higher premiums.

There are a number of factors you should consider when purchasing any product or service, and insurance is no different. Here is a checklist of things you should consider when purchasing automobile insurance.

1. Purchase the amount of liability coverage which makes sense for you.
2. Decide which optional coverages you want. For example, do you want the optional physical damage coverages in Comp/Collision or is the market value of your car too low to warrant purchasing them.
3. Finally, once you have decided what you want in your automobile insurance policy, you can now decide who you would like to purchase the insurance from. For example, you may decide you like the idea of purchasing insurance from a mutual company rather than a stock company.
4. You should also decide whether you would like an insurance broker (who is likely to tag on a broker fee on top of the policy in those states where it is legal) to assist you in your purchasing decision or if you would like to buy the insurance directly from a company that sells insurance over the phone or through the mail.

There are a number of things you can do to lower the cost of your automobile insurance. The easiest thing to do is to shop around. It is not surprising to find quotes on automobile insurance that can vary by hundreds of dollars for the same coverage on the same car. When you shop, be careful to make sure each insurer is offering the same coverage. Another way to lower the cost of your automobile insurance is to look for any discounts that you may qualify for. For example, many insurers will offer you a discount if you insure multiple cars under the same policy, or if you have had a driver education class in the last five years. Be sure to ask your agent or your company about their discount plans. Another easy way to lower the cost of your automobile insurance is to increase the deductible. Simply raising your deductible from $250 to $500 can lower your premium sometimes by as much as five or ten percent. However, you should be careful to make sure that you have the financial resources necessary to handle the larger deductible.