How much insurance do you need for an older car?

The insurance coverage minimums required by law vary from state to state, but every state -- except New Hampshire -- requires liability insurance. To determine how much insurance an older car will need, let's start there.

Liability insurance includes bodily injury liability, which covers expenses incurred by other people in an accident, as well as property damage liability, which covers damages to property owned by someone else.

Although bodily liability coverage can be as low as 10/20 (industry shorthand for $10,000 per person/$20,000 per accident), a typical coverage amount -- even for older cars -- is 100/300 ($100,000 per person/$300,000 per accident). This means that if one person was injured in an accident, it would cover up to $100,000 of their medical bills; however, if five people were injured, it would only cover up to $300,000. "It's incredibly important to have in the event of an accident; otherwise, the healthcare expenses could be financially crippling for you," Schrage says.

The amount of property damage liability you need depends on your net worth, which is the value of your assets minus your liabilities. You should opt to carry at least enough of this liability insurance to pay for damages to property owned by someone else. In most cases, this will probably be another driver's vehicle, but it could include other property, too. For example, if your car jumps a curb and you take out your neighbor's privacy fence -- or living room -- property damage liability will cover that.

Uninsured motorist coverage is required by law in most states, and offers financial protection if you're not at fault in an accident and the other motorist doesn't have insurance.

Comprehensive insurance, while not often state-mandated, is so inexpensive that it makes sense to include it in your coverage, says Schrage. It will provide some financial insulation if there are damages to your car from non-accident situations, such as theft, vandalism and fire.

Collision insurance covers damages to your car in case of an accident. "When selecting an amount of coverage, you definitely need to factor in the value of your car. Most experts recommend dropping collision coverage after your car is eight years old, because the associated premium just isn't worth it," Schrage adds.

If you drive an older car, it's probably OK to cut a few corners when it comes to buying car insurance. The key is to know where to scrimp. Insurance extras, such as rental-car reimbursement or tow coverage, aren't necessities -- especially if you have friends or family nearby who would be willing to give you a lift to work if your vehicle is unavailable because of an accident or repairs.

There is some coverage, however, that you shouldn't skip. Glass protection can save you hundreds of dollars (and you'll pay just pennies on the dollar for it): If a rock from a passing truck chips your windshield, you can simply have it repaired -- often for free -- if you opted for glass coverage. Without this protection, you'll pay for windshield and window repair and replacement out-of-pocket in an amount at least equal to any deductible your plan carries.

Although not legally required and not available in all states, it may be a good idea to carry personal injury protection, which can pay your medical bills in case of a car accident.

This coverage typically covers 80 percent of medical payments up to $10,000, capped at $8,000, and can be supplemented by a medical payment rider of $2,000 to make up for the shortfall. However, when selecting a level of coverage, you should factor in the quality of your personal health insurance policy. In some instances, your personal health insurance will be sufficient and you won't need this extra coverage, Schrage says.

As you're shopping for insurance for your older car, compare rates between providers and ask if there are additional discounts for bundling your insurance services. "Consider adding a homeowner's or life insurance policy with your provider to get an additional 10 to 20 percent discount on your insurance premiums," Schrage says.

Importantly, don't let your policy lapse. It could be illegal, and you could be charged with a crime if you get pulled over by the police for any reason. Plus, if you apply for auto insurance without an existing policy, you'll pay higher premiums.

Car insurance has been on my mind lately, probably because the rear bumper of my trusty four-wheeled steed now has a sizable dent. After a breakfast meeting at a local restaurant, I returned to my car and discovered that someone in the parking lot had backed his vehicle into it and left -- without leaving a note.

In all likelihood, the other driver didn't have insurance, as I was advised by a police officer who happened to drive into the parking lot as I inspected the damage. On the bright side, at least I do -- and that's sure to soften the blow as I gather repair estimates from area body shops.

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