You Have Two Kinds of Car Insurance

No one likes shopping around for car insurance. Each state has a minimum amount of required coverage, and in this tough economy that is exactly what most people settle for-the minimum.If one has to decide between food and adequate car insurance, food always wins.
Guess what? The minimum is all you really need. Let's qualify that statement, however; you only need the minimum of the right kind of insurance.
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I love the car insurance commercials that feature a mother or father holding a child, talking about how important it is to protect the things that are most valuable in their lives. This is of course a good idea. But it has nothing to do with car insurance.
Car insurance is intended to indemnify you from a loss that occurs as a result of something for which you are at fault (Comprehensive and Uninsured Motorists coverage are exceptions). Think about it. If your car is damaged as a result of someone else's negligence, their insurance company will pay for the damage. Car insurance is all about protecting yourself from your own mistakes.
A car insurance policy is essentially two different kinds of insurance. The first kind is the insurance that indemnifies you against the loss from damage to your vehicle. This vehicle damage insurance is also divided into two kinds of coverage: Collision and Comprehensive (also called Other than Collision).
Collision insurance is coverage for damage to your vehicle that results from you accidentally colliding with another object such as another car or a light pole in a parking lot. It is designed to cover the expenses to repair the damage that you caused to your car. Comprehensive insurance, also called Other Than Collision (because it is not "comprehensive") is coverage for damage to your vehicle that is from something that is no one's fault, such as damage that results from hail, a fallen tree branch, or an animal running into your car.
The other kind of insurance on an auto policy is Liability insurance. This kind of insurance is designed to pay for the expenses that result from physical injuries that occur to any people who are injured because of your driving mistake. Under the Liability portion of the policy there is also provision for coverage of expenses incurred due to damage you caused to someone else's property.
Remembering the principle that insurance should only be purchased for catastrophes, we must now distinguish between these two kinds of car insurance. Which one is designed to cover a loss that is a painful financial setback, and which kind covers a loss that is a catastrophe?
Unless you are upside down, owing more for an expensive vehicle than the vehicle is worth; Liability coverage is the only protection that covers you from catastrophic loss. The surprise is that Liability protection costs much less than Collision coverage. You can raise your deductible on your Collision protection, increase your Liability coverage, and still have a lower car insurance premium than you are currently paying.