What is Auto Liability Insurance?
The most important part of any auto insurance policy covers you for damage you cause to the other person's vehicle and any personal injuries that may have occurred to the other vehicle's occupants. While most states require minimum liability coverage, this is the coverage that you want to make sure protects you against significant monetary loss in the event you cause an accident. In the case of liability insurance, it is wiser to increase your coverage above the minimum required by your state, especially if you have a lot to lose, such as a home, and other valuables.

Bodily Injury Liability Coverage
Coverage for bodily injury not only includes treating the victim's acute injuries, but also covers you for their pain and suffering, loss of income, and funeral expenses. In the worst case scenario, the minimum required by the state is generally not enough to cover this. As a result, you may find it necessary to deplete your savings, sell your home and other valuables to pay for the victim's treatment. Common sense dictates that you buy enough personal injury liability insurance to cover your current valuables and any future assets you may acquire.

Property Damage
Not only does the property damage part of your auto insurance policy cover damage you caused to another vehicle, but it also covers other property as well. An accident involving a wall, a house, or other property can be expensive. Look to your property damage coverage to compensate victims in this case. In the event of litigation, you will receive legal defense assistance as well.

How Much Insurance Do You Need?
To compensate the victims in the event of an accident, and to protect your assets if the victims file a lawsuit, liability insurance can be set at a cap per person and per accident. To denote the proportion of the coverage amount devoted to personal injury and property damage, a fraction is usually used, like 50/100. The fraction represents thousands of dollars split between the two coverages. According to the Insurance Information Institute, $100,000 coverage for bodily injury per person and $300,000 per accident is recommended. You may purchase a larger amount of liability insurance if your net worth is over $300,000.

No Fault States
There are currently several states that are "no fault" states. In these states, your auto insurance policy covers damages to your vehicle and injuries sustained in your vehicle regardless of fault. The same is true for the other driver. His auto insurance policy would cover him. This differs from the standard liability insurance in which you are responsible for damages that you cause.

Setting Your Deductible
If you feel that the chances of ever filing a claim on your automobile insurance are unlikely, you can probably set your deductible higher ($1000 or higher). This will yield a lower premium. If you feel that your situation may make your vehicle susceptible to vandalism or other minor damage, setting your deductible lower ($500 is usually the lower limit of most policies), may serve your needs better. Expect your premium to be higher. None of us cherish the idea of spending money on something that we will probably never use. To have to deal with the consequences of an accident without insurance should remove all regrets.