Car accidents happen all the time. In the U.S., vehicles crash into each other every 5 seconds. But most drivers don't know those figures—most Americans just have insurance because it's the law. No one really wantsto pay for insurance, even if we recognize how necessary it is when accidents happen. Many of us would be hard-pressed to explain exactly what type of insurance we pay for every month.

The 7 Deadly Insurance Types

There are seven different kinds of insurance:

• Liability

  Liability insurance is the most basic type of coverage and is required by law. It covers vehicle damage, medical payments, as well as property damage—up to the policy limit.

• Comprehensive

  Comprehensive coverage insurance covers theft, environmental damage, and animal accidents. Comprehensive policies are more costly, so measure the value of your vehicle against the price of the policy to assess if the price of coverage is viable. If a person does not choose to purchase this coverage, an insurance company will not handle the claim should any other catastrophe other than a car accident occur.

• Uninsured motorist protection

  All drivers are legally responsible to be insured, but there's no guarantee that your fellow drivers are obeying the law. Uninsured motorist coverage shields you from car collision losses caused by a driver who doesn't have insurance to pay for them. Instead of leaving you on the hook for the damage caused by another person, UIM insurance covers property damage, medical costs, and whatever else arises from the accident.

• Personal-injury protection or PIP insurance

  Medical or personal injury coverage pays for the medical injuries sustained in a car accident, no matter whose fault it is.

• No-fault insurance

  No-fault insurance is insurance that covers the damage no matter who is at fault for causing the accident. Policies are usually designed to cover both personal injury and property damage. As you can imagine, no-fault insurance saves policyholders (and insurers) a lot of time spent on investigating accidents. When fault isn't an issue, then people can just get the money they need. However, these policies are normally expensive. It is only available in 12 states.

• Gap insurance

  Gap insurance covers the "gap" between the value of the vehicle and the amount you still owe on the vehicle. If your new car gets into an accident that totals it, the insurance company may pay out less than what you still owe to the dealership. Gap insurance covers the difference, so you're not left making car payments for months on a vehicle that's been totaled. It's best for expensive vehicles that are still brand-new.

• Collision

  The last policy is possibly the most valuable for commuters: collision insurance covers the damage of your car should you get in an accident. If your car is totaled, your insurer will pay the value of your vehicle. If you have a liability policy, you are responsible for paying any damage your vehicle may have incurred if the accident was your fault. Collision insurance ensures that your car is paid for—regardless of what caused the accident.

Should I Purchase Collision Insurance?

Here are four factors to consider when purchasing collision insurance:

• The value of your car
• The damage of an average accident
• Legal aid
• Coverage to rent a replacement car