There are several types of car insurance coverage, some legally required and others optional, and the type of coverage required may depend on your state's laws. Liability insurance is standard in states that apply tort law, while coverage for your own vehicle and passengers is the norm in a no-fault state. If you have an older vehicle, you may well only have liability coverage that provides some amount of coverage for damages. Making certain that you have adequate liability coverage is critical. In no-fault states, your insurance will cover some amount of damages to your own vehicle and medical expenses for passengers; however, you may still not have adequate coverage.

How much coverage do you need? This will depend upon your assets. If you have limited assets, there is little for an injured party to take in a lawsuit. On the other hand, if you are well off, have substantial savings, and own your home, you may need more bodily injury liability coverage. If you have no assets individual bodily injury liability coverage of $50,000 with a $100,000 cap per accident may be adequate. If you have more assets, you should consider at least $100,000/$300,000 coverage and may want to purchase an umbrella policy covering you in the case of any lawsuit or actions against you. While some states require property damage liability coverage as low as $5,000, many experts recommend carrying at least $50,000 in property damage liability.

You may be offered, and in a few states legally required to have, personal injury protection coverage. If you have good health, life, and disability insurance, personal injury protection coverage on your vehicle is likely not essential. If you do not, it may be a wise choice, or if you feel that your other insurance may be inadequate.

Underinsured and uninsured motorist coverage provides you with coverage in the event that an accident is caused by a motorist without coverage, or with inadequate coverage. Furthermore, accidents involving bicycles or pedestrians are also covered. Underinsured and uninsured motorist coverage can help pay any medical expenses not covered by your health insurance.

Finally, collision and comprehensive coverage provides you with coverage for your vehicle in the case of an accident. If there is a lien on the vehicle, your lender likely requires that you carry comprehensive coverage. Consider taking the highest deductible you can reasonably afford to reduce your insurance costs, and if you drive an older vehicle, you may choose to skip comprehensive coverage altogether.

Take the time to talk with your insurance company or agent about your insurance needs and make certain that your coverage provides you with the financial protection you require in case of an accident.