Liability insurance covers the damage you may be held responsible for if you are determined to be at fault in an auto accident. This includes bodily injury and property damage in addition to your legal bills if you are sued following the car accident.

Meet State Requirements for Auto Insurance

When obtaining a car insurance quote, remember that liability insurance is usually written as three numbers that indicate the various coverage levels per accident. For example, a policy that provides 20/40/10 coverage translates to:

• $20,000 in bodily injury coverage per person.
• $40,000 in bodily injury coverage per auto accident.
• $10,000 in property damage coverage per auto accident.

Each state sets its own minimums for an acceptable liability policy. State minimums for insurance can vary widely, so it's a good idea to check this information if you're considering a move in the near future and currently only carry the minimum level of coverage for your state. Depending upon your driving history, moving to a state with higher requirements could increase your monthly premiums significantly.

Some states also require personal injury protection (PIP) coverage, which will further increase the cost of your policy.

Purchase Enough Liability Insurance to Meet Your Needs

A liability policy providing the minimum levels of protection will keep you from being fined for breaking your state's financial responsibility requirements, but it may be in your best interest to obtain a policy offering more protection than what is legally required.

If you own your own home or have significant investments, a policy with higher protection may be needed to ensure you would remain financially secure after a car accident. In fact, most car insurance experts recommend purchasing $100,000 in bodily injury coverage per person, $300,000 in bodily injury coverage per accident, and $50,000 in property damage coverage per accident.

Shop Around for Car Insurance Quotes

To get the best possible coverage at the lowest price, you'll want to obtain car insurance quotes from several different companies. Each insurance agency uses a slightly different formula to calculate rates, so careful comparison shopping is needed to make sure you're taking advantage of all possible ways to save. To make the process easier, however, you can use an online database to fill out one central form and request quotes from multiple companies with a click of your mouse.