If you are currently driving without auto insurance coverage, it's highly likely that you are driving illegally. This is because almost every state in the US requires that you carry coverage, but the amount of coverage required within each state varies. Almost every state requires liability, and the actual dollar amount of coverage can vary as well. It is extremely important that you check out state requirements before you choose a policy.

Although there are some states who still do not require vehicle insurance, they may require those without coverage to report their lack of coverage and pay an uninsured drivers fee. You may also need to prove that, if you were to be found at fault for an accident, you have sufficient funds to cover repair costs, medical bills and other expenses associated with a car accident. In other words, not having gap insurance coverage can turn out to be much more expensive than paying a premium. Thus, even if you happen to live in one of the few states that does not require coverage, it it still extremely important to have.

Liability coverage, the type required in most states, covers any costs related to repairing another person's vehicle if you are found at fault for an accident. It may also cover things such as lost wages and legal fees. Bodily injury liability covers medical bills resulting from the accident. This type of coverage, however, does not pay for your vehicle repairs of medical bills. Thus, most people people prefer more extensive coverage. However, if you drive an older car that isn't worth much and you would be able to purchase another car if needed, you might consider obtaining only liability.

Collision coverage is the next step up. While liability covers damages to the other driver's car, collision covers the damages to your own car. So, if you are involved in an accident, your insurance company will pay you compensation for the amount the car was worth at the time of the accident - not the amount the car would be if purchased brand new.

Comprehensive coverage is coverage that can be added to cover all of the "what if" and "bad luck" sorts of accidents that can happen. If you strike a deer and damage your car or if a tree limb cracks your windshield, then comprehensive coverage will pay for these things. It also covers theft, weather-related damage (such as hail), vandalism and more. This is a type of coverage that is smart to have if you live in a city or busy area where you often must park your car on the street. However, again, if you have an older car that is not worth much, this may not be the most economical route. If your car is newer, however, it's a good plan to have.

Medical or Personal Injury Coverage is additional coverage that will pay for your medical bills if you are involved in an accident. It will also pay for the bills of passengers in your car who were also injured in the accident. This is great coverage to have, but really necessary if you have good health insurance coverage.

Gap coverage is available for anyone who has purchased a car, but is still working to pay if off. Needed auto insurance coverage could save you the hassle of finishing paying for a car even after it was totaled in an accident. Gap insurance pays off the rest of the car for you. It's usually required by banks who provide loans for car insurance, but otherwise is really only worthwhile if you owe more for the car than it's current value.