Insurance policies can be confusing, and if you don't understand the different types of coverage, you may leave yourself financially compromised. On today's sleek cars, a little tap on what used to be the bumper can cost you $1000. If the damage extends to a fender or hood you may be up to $2500. A solid hit in the front of your vehicle will set you back a minimum of $4000, and if the engine or drive train is involved your loss may exceed $10,000. Most new and late-model vehicle owners can't afford that kind of loss, so l recommend comprehensive and collision insurance for every vehicle I sell. If you finance a car through a bank or car dealer, the lender will require them both anyway. Car dealers cannot allow a vehicle to be delivered without first obtaining an insurance card that has the purchased vehicle's VIN# on it. Here's a list of the common types of coverage

Bodily Injury and Liability - This mandatory coverage protects you in the event you cause a crash that injures someone. It also covers your legal defense if needed. Bodily Injury and Liability is made up of two amounts (eg: 100,000 / 500,000). The first limits the amount of medical payments to a single person per incident, while the second puts a cap on the total amount paid out to all injured persons per occurrence. I recommend the most coverage you can afford.

Car Rental - If your vehicle is in the shop for repairs resulting from an insurance claim, this coverage generally pays $15 per day for a rental car for up to 30 days. Good luck finding a rental car for $15 a day. Most sub-compacts start at $25 per day, with luxury models priced at $50 or more. In addition, severely damaged vehicles are almost never repaired in the first 30 days. I've sometimes had to wait weeks just to get a customer's car looked at by their insurance adjuster. Get the highest limits available; they only add a few dollars to most policies. They pay for themselves if your car is severely damaged and off the road longer than a month.

Collision - Collision coverage pays for physical damage to your vehicle caused by a collision. If you're judged to be at fault, this coverage pays to fix your car. If your vehicle is worth more than $4000, I urge you to get this coverage. Get a policy with a $250 deductible or less, if possible.

Popular with dealers, unpopular with me. Pays off your auto loan should you die or become permanently disabled. Premiums range from $10 to $40 per month. I cannot recall a single instance of any customer using this coverage, and you can't be forced to buy it. If your impending death or disability worries you, check your coverage under life insurance or disability policies you already have. If you need it, your insurance agent can probably add it to your existing policy for a fraction of what the dealer would charge

Gap insurance covers situations such as the theft or totaling of the car, when you end up owing more on the lease than the car is worth. Standard insurance will pay up to the car's current value, perhaps even the replacement value. But if you owe more than that, you still have to pay the difference. Gap insurance will do this for you.

Although some states still don't have this beneficial insurance, No Fault is mandatory in most states. It pays medical expenses for you and your family, the passengers in your vehicle, and any pedestrians you may injure in an accident. The insurance is paid out regardless of who was at fault. (It does not cover property damage of any kind.) The medical benefits of a no-fault policy are sometimes called Personal Injury Protection.

If you travel to Canada or Mexico on a regular basis, make sure your automobile insurance coverage follows you. It may be necessary to take out country-specific policies if your carrier won't cover you. You especially don't want to get in an accident south of the border without a good policy. I consider this mandatory for anyone traveling in our friendly neighbors to the north and south.

Everyone should have this coverage, because it protects us from all the low-lifes who drive around with cancelled policies. In most states you have to show proof of insurance to register a vehicle. Some people, however, take out a policy for registration purposes only, then let it get canceled by failing to send in their first installment payment. Luckily many states are cracking down on these criminals, by requiring insurance companies to notify the state when an automobile policy gets cancelled. The state's DMV then revokes the registration of the non-insured vehicle and notifies the registrant that the plates must be surrendered at once.

Preferably at the time of the purchase of your vehicle you will have to decide which type of insurance you want to use for coverage on it.Using a good deal of time to make your choice of insurance can make it less of a hassle.Some solid research and some friendly advice from an insurance agent can go a long way towards clarifying your situation and help you make the right decision about car insurance.