How Much Coverage Do I Need?
Auto insurance isn't a "should I or shouldn't I?" proposition. Most states have laws requiring you to purchase at least some auto insurance. While specific requirements will vary from one state to another, you will typically be required to buy some level of liability coverage. Other types of auto insurance coverage may be optional or required, depending on the state.
In reality, though, there is often a large gap between the insurance you're required to carry and what you should carry. Even in states with the most stringent requirements, many insurance professionals suggest that you have a broader scope of coverage (i.e., more types) than the state mandates, and that your coverage limits in most areas greatly exceed the required state minimums. The point made by such professionals is that you should ideally have an appropriate amount of auto insurance, so that you're adequately shielded from certain risks.
Your liability levels should be equal to or above the amount of damages you could expect in an accident. Remember that any damages over the limits of your policy are amounts you have to pay out of your own pocket. When you consider many vehicles are now worth over $20,000 and can carry four passengers, the possible damages add up in a hurry. Most insurance professionals suggest at least 100,000/300,000 liability limits.
What if you can't afford as much insurance as your agent or company thinks you should have? How much coverage you can purchase may be limited by your financial circumstances. If the cost of an all-inclusive policy would place too great a strain on your budget, you may have to settle for less coverage to lower your premium. Aside from finances, other personal considerations will enter the picture as well. Such factors as your location, how much driving you do, the way you drive (i.e., aggressively or defensively), and the size of your assets should all play a part in determining the range and amount of coverage you need.