Another misconception about insurance is that the law only requires you to have the minimum amount of auto liability insurance. Now nearly every State requires that you buy a minimum amount of auto liability coverage, but buying only the minimum amount of liability means you're likely to pay more out of pocket for losses incurred after an accident. Now those costs could be pretty steep. The insurance industry and consumer groups generally recommend a minimum of $100,000 for bodily injury protection per person and 300,000 per accident. If you have substantial personal financial assets to protect in the event of a lawsuit, you may even want to consider an umbrella liability policy. There's another misconception that if another person drives your car in the event of an accident, his or her auto insurance will cover the damage. Now in most States, the auto insurance policy covering the vehicle is considered the primary insurance. This means that the car owners insurance company must pay for the damages caused by the accident. In most States, the auto insurance policy covering the vehicle is considered the primary insurance. Now this means that the car owners insurance company must pay for the damage caused by the accident regardless of who's driving. Policies and laws differ by State. So, make sure you understand the rules before allowing another person to drive your car.