There is no quick and easy solution. While you are required to obtain the minimum amount of car insurance required to drive in your state, the amount you purchase above that should be determined by your personal financial situation.

Protect your wallet with sufficient liability coverage

The primary component of car insurance, liability coverage, does not compensate you if you cause a collision. Instead, it pays for injuries, deaths, and property damage you cause, up to the limits of your policy. Liability limits are frequently listed in the format “25/50/15,” which means your insurer will pay $25,000 per person and $50,000 per wreck for injuries you cause, and up to $15,000 for property damage you cause.

Minimum bodily injury limits in states where it is required can be as low as $15,000, but a bad wreck can easily result in medical bills that exceed that amount. According to the National Safety Council, the average cost of a crash resulting in non-disabling injuries was more than $28,000 in 2019. And if you're sued and don't have enough liability coverage, you'll have to pay the rest out of pocket.

So, how do you know when you've purchased enough? TJ Roberts, owner of a Farm Bureau insurance agency in Mission, Kansas, suggests that you consider your net worth and how much you drive when determining the liability limits on your auto policy. The most important aspect of car insurance, according to Roberts, is having the appropriate coverage limits for your financial situation.

Add up all of your assets, including investment and retirement accounts, and subtract any debt you owe to calculate your net worth. Then, make certain that you have enough bodily injury liability coverage to cover that amount.

If your liability limits have been reached but you require additional coverage, you can purchase it through an umbrella insurance policy. These policies increase your liability coverage for both your car and your home, usually in $1 million increments.

If you don't have any other assets to protect besides your car, you're probably fine with purchasing the bare minimum of liability coverage.

Choose full coverage based on the deductible you can afford

Collision and comprehensive coverage, when added to a liability policy, is commonly referred to as "full coverage." It pays for damage to your own vehicle, regardless of fault. When your car collides with another, collision coverage kicks in. Comprehensive coverage pays for damage to your car caused by events beyond your control, such as vandalism, theft, or a deer collision.

Unless you lease or finance a car, both are optional. If you drive an expensive vehicle that would be difficult to replace, full coverage may provide some peace of mind in the event of an accident. If the cash value of your car is low or you're willing to pay for a replacement, you're probably better off skipping comprehensive and collision coverage.

If you do decide to purchase collision and comprehensive coverage, keep in mind the deductible — the amount you must pay out of pocket before your insurance company will pay out on a claim. Collision and comprehensive deductibles typically range from $250 to $1,000; select an amount you can afford to pay in an emergency.

Uninsured motorist coverage is recommended

According to Insurance Research Council data from 2019, one out of every eight drivers on the road does not have car insurance. If you are hit by one of them, you may be out of luck unless you have uninsured motorist coverage — or underinsured motorist coverage if the person whose car hits yours lacks sufficient liability insurance. They are frequently sold together in limited amounts, such as liability coverage.

While it is not required in many states, Roberts recommends including it in your policy anyway. “Why would you insure other people's belongings but not your own?” he wonders.

Keep it simple if you're unsure how much to add to your policy. Match the liability limits you've chosen for bodily injury and property damage.

Some optional coverage types may be worth it

Other types of coverage available from insurers include:

• Glass coverage pays to repair damaged car windows; this is useful coverage to have if a rock on the road hits your windshield.
• Medical payments coverage will pay for your or your passengers’ injuries after an accident and can be useful to cover health insurance deductibles.
• Roadside assistance is available in the event that you require a tow or a jump start, though some companies may charge you out-of-pocket for services in addition to the regular premium.

When purchasing insurance, Roberts advises you to prepare for possible scenarios that may occur on the road, regardless of the coverage types you select. “You don't want to be wondering about your coverage when it's too late.”