How much car insurance coverage should you buy? You might think that the more insurance you have, the better, but that isn’t always true. Many drivers are required to purchase certain amounts of insurance coverage by law—these are referred to as mandatory coverages. If you don’t purchase the necessary amount of insurance, you could be fined and/or your license could be suspended by your state’s DMV. When deciding how much car insurance coverage to get, know what coverages your state requires and which coverages you need based on your individual needs.

On your policy

Your policy is what protects you from financial loss in case something happens. For example, if you’re involved in an accident that wasn’t your fault and it results in physical damage to your car or injuries to yourself or another person, your policy will kick in and pay for repairs. Your car insurance policy also covers liability - which pays for damages to other cars and property, medical bills and legal fees resulting from a crash you caused. The most common types of auto insurance are: Collision - This coverage provides financial protection against damage to your vehicle caused by an accident. Collision usually is purchased along with comprehensive coverage.

In an accident

According to California law, you are required to purchase liability insurance. The minimum amount of coverage you need is determined by your age and whether or not you have a special license (like a commercial driver’s license). The amount of liability insurance must be equal to or greater than $15,000 for one person injured in an accident and $30,000 for two or more people injured in an accident. If there is property damage that exceeds $4,000, then you must also carry up to $10,000 worth of property damage coverage. Property damage coverage is only used when another driver’s vehicle is damaged during an accident; it doesn’t apply if your car was damaged as a result of vandalism or theft. If you want additional protection beyond what is legally required, consider purchasing additional collision and comprehensive coverage. Collision covers damages caused to your own car due to an accident with another vehicle or object. Comprehensive covers damages caused by fire, theft, weather conditions like hail storms, flood waters or earthquakes—even if your own negligence caused the incident! Just keep in mind that these optional coverages can increase your premium significantly. Shop around and compare rates from multiple companies before making any decisions about which coverages will best protect you from unexpected incidents on both a personal level and a financial level. When shopping around for auto insurance quotes online make sure to include all available discounts—for example, being married might qualify you for a discount on your premium!

When your car is stolen

Comprehensive car insurance will pay to replace your stolen vehicle—minus your deductible. But if you’re not a victim of a carjacking, but instead fell victim to auto theft, comprehensive insurance won’t help at all. In fact, you may have only theft coverage on your policy. For example, if someone broke into your parked car and stole it after you forgot to lock it—you probably wouldn’t be covered in that situation since comprehensive insurance generally requires that vehicles be stolen while in motion (for obvious reasons).

 Comprehensive insurance also covers events that are considered acts of nature. The most common example of natural catastrophes affecting cars is hail damage. However, another unexpected thing to be covered by comprehensive insurance is acid rain. If a sudden burst of acid rain left your car damaged, you may have an argument for your claim even if you live in a place where these storms are rare or non-existent.

Fortunately, car insurance generally won’t cover a flood, which can severely affect even locked cars (as anyone who has owned a sports car knows). But there are some exceptions to natural disaster exclusions—if your vehicle was stored at an airport and was affected by water from an act of God (such as hurricane), it could be covered.

Liability Coverage

As a driver, you’re required to have some form of liability coverage—and if you live in one of 17 states where it’s not required by law, then it’s at least recommended. Liability insurance covers costs associated with injuries and property damage to others. A typical coverage limit is $100,000 per person and $300,000 per accident. If you're concerned about protecting yourself against large expenses, consider adding umbrella or excess liability coverage to your policy (around 10% of annual income is a good rule of thumb). And if you think that's costly now...think about what an accident could cost over time. The numbers can get staggering quickly.

Bodily Injury Liability Coverage

When someone is injured in an accident that you cause, bodily injury liability coverage pays for their medical bills and lost wages. Most states have minimum requirements for bodily injury liability coverage; these vary by state but may be between $30,000 and $100,000 per person with a total limit of up to $300,000 per accident. This amount can be reduced or increased depending on your ability to pay or your desire to protect assets if someone were to successfully sue you.

Property Damage Liability Coverage

This type of coverage is exactly what it sounds like; it protects you financially in case you damage someone else’s property with your car. Many states require that you have at least a minimum amount of property damage liability insurance before they’ll issue your car insurance policy, so you won’t be able to avoid buying it.

Uninsured Motorist Bodily Injury Coverage

If you’re in an accident with an uninsured driver or a hit-and-run driver, you may have to cover your medical bills out of pocket. Uninsured motorist bodily injury coverage will help protect you if that happens. If you want comprehensive coverage, look for a policy that offers at least $50,000 per person and $100,000 per accident. If you want liability insurance only (i.e., protection from other drivers), minimum bodily injury liability limits are typically $25,000 per person and $50,000 total per accident.

Medical Payments Coverage (MedPay)

MedPay is insurance coverage that will pay for injuries sustained in an accident, regardless of who was at fault. This can include medical bills, lost wages and even your funeral expenses. What’s more, MedPay coverage may be available for less than you think; many states have passed legislation to require insurers to offer MedPay at no cost as part of basic car insurance. These are typically referred to as no-fault or personal injury protection (PIP) laws. Be sure to check with your state government for information about these laws and their availability in your area.

Personal Injury Protection (PIP) or No-Fault

State laws typically require drivers to purchase personal injury protection (PIP) or no-fault car insurance. No-fault PIP covers medical bills and lost wages for you, your passengers, and other drivers and their passengers involved in an accident. Property damage may also be covered by your no-fault policy. If you live in a no-fault state, your insurer will automatically extend PIP coverage to you when you buy a policy unless you opt out of it or choose to lower your coverage limits below what’s required by law.

Physical Damage/Collision

This kind of coverage will pay for physical damage done to your car. However, note that if you have comprehensive coverage (discussed below), you’ll already be covered in case of a collision. So if your car is totaled or stolen and there’s no way to repair it, collision insurance will pay out. This can help offset your deductible amount if you have that type of coverage—so even if your car is old and not worth much, it could still end up helping you save money in total.

Comprehensive/Other Than Collision (Comp/Other Than Collision)

Comprehensive insurance and other than collision (often abbreviated as comp/other than collision) are two types of car insurance coverage. To understand what exactly comprehensive and other than collision policies cover, it helps to know that there are two broad categories of vehicle damage — those that occur from something hitting your car (collision) and those that occur from something not hitting your car but causing damage anyway (comprehensive). Many insurance companies offer both collision and comprehensive coverage as part of one policy. If you have a single-vehicle accident, it's possible you'd only have one policy covering both. Your agent can better explain whether or not you need these types of coverage based on your specific needs and financial situation.