Insurance: Auto, Life, Health.

An insurance policy is a package of different coverage’s. Most states require you to purchase a minimum amount of certain kinds of coverage. But if you're interested in protecting yourself from a lawsuit or from hefty bills, then it makes sense to buy more than what's required.

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coverage limits (that's for the damage you do to others) are usually presented as a series of three numbers. For example, your agent might say that your policy carries liability limits of 20/40/10. That stands for $20,000 in bodily injury coverage per person, $40,000 in bodily injury coverage per accident, and $10,000 in property-damage coverage per accident.

Coverage is the foundation of any insurance policy, and is required in most states. If you are at fault in an accident, your insurance will pay for the bodily injury and/or property damage expenses caused to others in the accident, including your legal bills. Bodily-injury coverage pays for medical bills and lost wages. Property-damage coverage pays for the repair or replacement of things you wrecked other than your own car. The other party may also decide to sue you to collect "pain and suffering" damages.

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