Nearly all states require a set minimum amount of third-party liability coverage. Generally, states that don't require these policies are "no-fault" states, which have enacted laws that eliminate most claims of "pain and suffering" and many other standard small claims. Regardless of these "no-fault" laws, experts agree that the ideal policy should have more third-party liability coverage than is required by law. Juries sometimes award very large damages to plaintiffs with only minor injuries; the minimum required policy is highly unlikely to significantly defray liability costs in the event of a major lawsuit. And "no-fault" laws generally only protect drivers from petty claims - big injury suits are still allowable.

Bodily Injury - The common notation for bodily injury policies looks like 50/100 or 100/300, where the first number is the dollar amount (in thousands) of total coverage in the event that one person is injured or killed, and the second number is the total dollar amount (in thousands) for an entire accident. Again, this coverage will also handle legal expenses involved in settling suits brought against you. Experts suggest that a policy have at least 100/300 insurance ($100,000 coverage for one person's injuries, $300,000 per accident). Property Damage - Following the same notation as above, property damage is the third number listed on the policy, e.g., if the policy were 100/300/25, it would offer $25,000 worth of coverage to repair or replace others' property (including cars). Typically, states require property damage insurance of around $15,000, but because the cost of the average new car is well above $20,000, coverage of at least $25,000 generally makes sense.