Most car owners know the importance of having auto insurance. However, understanding the intricacies and terminology related to insurance is what many of them find challenging. Because you’ll be spending a substantial amount of money paying your car insurance premiums, it is important that you have a better understanding of what you are paying for. This will help you buy the most suitable and cheap auto insurance, thus saving you money as well. Insurance needs not be a mystery. Motorists need to know the basics of auto insurance.

In broad terms, liability means legal responsibility. Most states require all drivers to carry at least the minimum liability cheap auto insurance. If you are found to be responsible for damage or injury resulting from an accident, liability coverage pays for the arising expenses.

The amount you choose to pay for if you make a claim, on to which the insurance provider tops up. In most cases, choosing a higher deductible means lower premium, which translates to cheap auto insurance.

Collision coverage
If your car hits another one and is damaged, this type of cover pays for the cost of replacing or repairing the damaged car.

Comprehensive coverage
This provides coverage if your car is damaged because of vandalism, fire or some natural disasters. It is also better for a policyholder to find out what this type of insurance covers and what it excludes.

Property Damage Liability Coverage
This type of cheap auto insurance protects the holder who is held liable for damage to other people’s property after an accident. The cover will also cover any expenses resulting from a lawsuit filed against you. The cover has a limit on the amount it pays, which you choose when purchasing the insurance policy.