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Most states have laws that make buying car insurance mandatory before you can start driving. So if you own a car, you have probably heard about car insurance. But do you understand exactly how it works? The purpose of car insurance is to pay for the bodily and property damages incurred after an accident. The law requires all registered vehicles to be insured whether they are driven regularly or not. The mandatory minimum insurance as per state law is known as “liability insurance”. It varies from state to state. Liability insurance covers any injury or damage to the other person or his vehicle if you are responsible for the accident. For instance, if your state policy requires you to have a 25/50/10 plan, it means that $25,000 is for bodily injury suffered by the other driver, $50,000 covers medical expenses for bodily injuries suffered by everyone in the accident and $10,000 pays for property damages. Some states follow a tort system. Under this system, one of the parties involved in...