Car insurance is a contract between you and the insurance company. If your car meets with an accident, you will be eligible for compensation for the losses under the contract. Your part of the contract is to pay the premium.

Car insurance covers property, liability and medical coverage. Damages or theft to your car are paid by property coverage. If you car causes bodily injury or property damage, the liability coverage pays for your legal responsibility.

The cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses are taken care of by the medical coverage.

Most car insurance policies are valid for six month to a year. When the validity is over, you must renew the policy.

The law in all states require you to have some form of car insurance if you own or operate a car.

The penalty for driving a car without insurance varies from state to state. In some states, your car will be impounded. Heavy fines are imposed in some states. You could be in serious trouble if you car is involved in an accident without insurance. You will have to pay out of your own pocket for any injuries or damages.

Your credit history, the age and type of your car are also vital factors in determining the rate you have to pay for car insurance.

As the owner of a car, you are responsible for providing insurance for the car, no matter who is operating the car. Your car will be operating illegally if it does not have insurance.

The most important route to reasonable savings in auto insurance is comparison shopping — Provided that you do it well.

The difference in quotes given for a profile could range from several hundred dollars to well over a thousand.

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