More Than the Minimum
Your inclination might be to get the minimum insurance coverage required by law in your state. The trouble with minimum coverage is that it might not fully protect you — or your assets — if you're at fault in an accident. It's a better idea to carry more than the minimum coverage unless you are driving an older car with little value and have no assets to protect.
Every state in the nation except for New Hampshire requires you to have liability insurance. In Alabama, for example, the minimum requirements are $25,000 of bodily injury liability for one person, $50,000 bodily injury liability for all people in an accident, and $25,000 of property damage liability. Another type of coverage, personal injury protection (PIP), or a system called medical payments (MedPay) in some states, pays for your own medical expenses, any lost wages, and whatever other costs may arise when you're injured in an accident. It usually pays about 80 percent of your losses, and it also pays a death benefit.
Some states also require you to purchase car insurance that will cover your medical expenses, pain and suffering losses and, in some states, car damage, in the event that the other motorist is at fault and is either uninsured or underinsured. That mandatory coverage varies according to state. Check this chart from the Insurance Information Institute to see what your state requires.