Liability Coverage

You'll be required by state law to purchase a minimum amount of some or all of the following types of liability coverage:

Bodily injury liability: Protects your assets if you are held liable for an auto accident in which other people are injured or killed.

Property damage liability: Covers repairing or replacing the autos or other property of other people.

Uninsured/underinsured motorist coverage: Unless you live in a "no-fault" state (where your own insurance will cover your losses), this coverage insures you against losses caused by other drivers with little (underinsured) or no (uninsured) auto insurance.

To adequately protect yourself, you may want to purchase much more than the minimum amount of coverage required in your state.

Collision, other-than-collision, and medical payments coverages

Although these types of coverage are optional in most states, it often makes sense to purchase them, unless you can afford to pay for damages yourself.

Collision: Pays to repair or replace your car if it's damaged in an accident.

Other-than-collision (also known as comprehensive): Insures your car against damage caused by something other than an auto accident (e.g., theft, fire, flood, vandalism).

Medical payments or personal injury protection: Covers various medical expenses not covered by your health insurance or your passengers'.

Here are some things you'll always need to cover yourself:

Deductibles: The amount of money that you've agreed to pay out of your own pocket before your insurance coverage steps in.

Exclusions: Events or situations your policy specifically omits from coverage, such as property damage or personal injury you intentionally cause to others, or damage to your own car due to mechanical failure.

Costs above limitations: Any expenses for which you're responsible that exceed the caps on the dollar amounts of coverage you're entitled to receive under your policy.