• Auto insurance is mandatory in most states.car crash image by dawn from Fotolia.com
  
  Auto insurance is an important part of driving responsibly. Besides covering you in case of an accident, it can also protect you if another driver causes the accident. Most states mandate some form of auto insurance for all registered vehicles, though the specific policies vary from state to state. There are several common auto insurance regulations that make driving less of a financial risk for everyone.
  
  

Injury or Death Insurance

• One of the most common forms of auto insurance is liability coverage for injury or death. This type of insurance pays damages up to a specified amount in the event that an insured driver injures someone, such as another driver, passenger or pedestrian. Every state except New Hampshire requires drivers to carry liability insurance.
  
  Insurance companies generally offer injury liability insurance at two separate levels: one for death or injury to a single person, and a larger amount for death or injury to more than one person. Insurance payments are made directly to the injured party rather than to the policyholder. In California, which has more drivers than any other state, the minimum allowable amount of injury liability insurance is $15,000 for injury to one person and $30,000 for injury to multiple people.
  
  

Property Damage

• A second part of liability insurance that is mandatory covers property damage. It covers damage to both public and private property, including other vehicles, public utilities or road signs and private buildings or landscaping. Unlike liability insurance, property insurance is usually offered at one level, which represents the maximum payout. California law, for example, mandates at least $5,000 of property damage insurance for every driver.
  
  

Insurance Alternatives

• Some states have laws that allow drivers to have alternatives to private auto insurance. State-sponsored low-cost insurance is available to some low-income drivers. In addition, states may allow drivers the option of submitting a cash deposit or bond in lieu of carrying personal auto insurance.
  
  

Tort vs. No-Fault

• Each state also has its own method for determining fault in the case of an accident involving more than one driver. Some states are tort states, meaning that through an investigation or admission of guilt one driver is designated as at fault. This driver's insurance is then legally responsible for paying for damages to both vehicles, all injured parties and any property damage, up to the limits in the guilty driver's policy.
  
  Other states use a no-fault method, which requires each insurance company to cover that driver's damage costs. Once the payments have been made, either insurance company can seek restitution from the other company if they believe that the other driver was at fault.
  
  Finally, some states have an add-on policy, which is similar to the no-fault policy but allows drivers to seek additional financial restitution from one another by filing a lawsuit.
  
  

Other Insurance

• While not mandated by law, there are several other types of auto insurance that most states allow without the coverage counting toward legal minimums. One of these types of insurance is comprehensive insurance, which covers a vehicle in case of theft or fire. Collision insurance is also common, providing coverage for damage to the vehicle in accidents caused by the policyholder. If a car purchase is financed, the lending institution may require both comprehensive and collision until the loan is paid.
  
  Uninsured motorist insurance is one last type of additional auto insurance. It covers the policyholder in the case of an accident where the other driver is at fault but is illegally uninsured, or the amount of damage exceeds the driver's insurance limits.