Types

• There are several types of car insurance policies that can protect a driver in the event of an accident. The most common form is collision insurance, which is usually an optional add-on to a standard insurance policy. Collision pays the driver for the damage to his own vehicle, either from an accident with another car or a single-car accident, such as driving off the road.
  
  Uninsured motorist insurance protects drivers who are involved in an accident caused by another driver who lacks car insurance. This type of insurance pays for damage or medical costs associated with the accident.
  
  

Features

• There are several features of accident insurance that make it important. A standard insurance policy contains bodily injury insurance, which pays for medical costs associated with the injury or death of another motorist or pedestrian.
  
  Property damage also is included in an accident insurance policy, paying for damage to other vehicles as well as public and private property including street signs, landscaping and mailboxes.
  
  

Significance

• Besides providing drivers with peace of mind, accident insurance has some very practical significance. The cost of car repair can be far more than a driver at fault for the accident is able to pay. At the same time, the medical costs related to the injury or death of another driver are likely to be very expensive.
  
  Accident insurance limits the driver's liability in these situations, while also providing a predictable annual or monthly premium and a stable deductible payment amount on any claims, making it easier to plan auto insurance as part of a budget.
  
  

Options

• Most drivers opt for accident insurance through a private insurance provider. Some providers combine auto insurance with life insurance, homeowners insurance and supplemental insurance policies in a discounted bundle. For low-income drivers, states like California offer a state-sponsored discount accident insurance program to cut down on the number of uninsured drivers on the road.
  
  

Penalties

• The penalties for driving without accident insurance can be severe. Liability for damage and the possible costs associated with a lawsuit are one of the most severe possible penalties. Every state except New Hampshire requires accident insurance for all vehicles. This means that uninsured drivers can't legally register a vehicle. It also may subject uninsured drivers to fines.