Texas law requires you to have auto liability insurance, and if you still owe money on your car, your lender requires that you also carry collision and comprehensive coverage. Read your policy carefully to know exactly what it covers.

Liability - pays medical and funeral cost, lost wages, and compensation for pain and suffering, car repair or replacement costs, auto rental while their car is being repaired, punitive damages awarded by a court.

Medical Payments -Pays: Medical and funeral bills arising from accidents, including those in which the victim was a pedestrian or a bicyclist.

Personal Injury Protection (PIP) - Pays: Same as medical payments coverage, plus 80 percent of lost income and the cost of hiring a caregiver for an injured person.

Uninsured/Underinsured Motorist (UM/UIM) - Pays: Your expenses from an accident caused by an uninsured motorist or if the other driver did not have enough insurance to cover your bills, up to your policy's dollar limits. Also pays for accidents caused by a hit-and-run driver if you reported the accident promptly to the police.

Collision (Damage to Your Car) - Pays: The cost of repairing or replacing your car after an accident, regardless of who was driving or who was at fault. Payment is limited to your car's actual cash value, minus your deductible. Actual cash value is the market value of a car like yours before it was damaged.

Comprehensive (Other than Collision) - Pays: The cost of replacing or repairing your car if it is stolen or damaged by fire, vandalism, hail, or another cause other than collision. Comprehensive coverage also pays for a rental car or other temporary transportation if your car is stolen.

Towing and Labor - Pays: Towing charges when your car can't be driven. Also pays labor charges, such as changing a tire, at the place where your car broke down.

Rental Reimbursement - Pays: A set daily amount for a rental car if your car is stolen or is being repaired because of damage covered by your policy.