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Collision Coverage is important to have if a car is new and valuable, but less important as the value of the vehicle declines. If the car is only worth $1,000 and the deductible is $500, it may not make sense to buy Collision Coverage. Collision Coverage is not generally required by state law.

Comprehensive Coverage (also known as Other Than Collision Coverage) pays the cost of miscellaneous damages to your car not caused by a collision, such as a fallen tree, fire and theft. As with Collision Coverage, you can choose your deductible.

The minimum coverage for bodily injury varies by state and may be as low as $10,000 per person or $20,000 per accident. Many auto policies have a maximum of $300,000 or $500,000 per accident for Liability Coverage. If you injured someone with your car, you could be sued for a lot of money.

The minimum that you must carry varies by state, but minimum limits likely won't be enough to protect you in a serious accident. With many cars costing upwards of $50,000, you could easily be responsible for a substantial repair bill if you total someone's car. Higher limits are available to purchase. If you have a Personal Umbrella policy, you will be covered for excess costs, but your insurance company may require that you carry more than the minimum limit on your auto policy to qualify for a Personal Umbrella policy.

Medical Expenses Coverage pays the cost of medical care for you and your passengers in the event of an accident, regardless of who is at fault. This coverage is optional in most states, and you can choose different levels of coverage. For instance, if you choose a $2,000 Medical Expense Coverage limit, each passenger will have up to $2,000 coverage for medical claims resulting from an accident in your vehicle.

Personal Injury Protection covers your medical costs and those of your passengers, regardless of who was responsible for the accident. PIP Coverage is only available in select states. The legal minimums and optional limits that may be available are set by state law.

If you are involved in an accident and the other driver is at fault, but has too little or no insurance, this covers the gap between your costs and the other driver's coverage, up to the limits of your coverage. In some states, this coverage is limited to bodily injury, while in others it may cover property damage as well. Select states require you to carry this coverage, while others let you reject it. The legal minimums and optional limits that may be available are set by state law.