My first automobile accident happened when I was just 18 years old. Though it wasn't my fault, as a young male driver, even a minor accident had the potential for disaster written all over it. Not only could it have caused serious physical harm to me or someone else involved, it may well have meant the difference between affordable or prohibitively expensive insurance rates for the rest of my life. Thankfully my parents had taken the advice of their insurance agent and provided our family with the auto insurance coverage best suited to our needs at the time.

What amount of auto insurance you need depends on several factors. Here are a few tips I trust will help make your decision a little easier.

Liability coverage is a legal requirement across our country. But how much liability coverage is right for you? Several factors come into play when making a determination. The easiest way to look at this is to imagine everything you own riding in the vehicle with you. All your assets, such as the equity in your home, savings and investments, earnings or earnings potential in the case of students, anything that has value is subject to risk every time we get behind the wheel of our vehicle.

In the case of a serious accident where someone is permanently disabled or worse yet, killed, medical expenses and loss of future income can add up to millions of dollars. If the situation were reversed and it was you or a family member negatively affected by an accident, how much would you seek as appropriate payment for damages?   

As a general rule, most insurance companies suggest minimum liability coverage in the amount of $1-2 million dollars. Of course, individual situations may dictate higher liability coverage, so consult your agent. The potential for savings is life-changing should the unforeseeable happen and you suddenly find yourself faced with a lawsuit.

It is also a requirement in Canada, (except in Quebec) that you have accident benefits coverage. This will protect you if due to the accident you are unable to work. Medical expenses over and above provincial health plans will be covered, along with income benefits.

Generally speaking, Comprehensive coverage deals with issues such as a broken windshield, theft, vandalism or fire. The higher you're deductible, the less it will cost. Consider such things as where your vehicle is parked and your daily commuter routes when deciding if a low, medium or high deductible is best for you.   

It may seem obvious, but the cost of towing your vehicle from the accident scene is not necessarily part of your auto insurance coverage. In some case, separate Towing coverage is required. Ask your agent if this is part of your plan before finalizing coverage.

Once your vehicle arrives at the body shop, what happens if it is tied-up in repair for an extended period of time? How long can you afford to be without your car or work vehicle?

Rental Reimbursement coverage provides you with a set amount of money that may be applied to the cost of renting a vehicle. In some cases, it may cost as little as $20 a year for up to $1,000 in rental reimbursement. A small investment up front can save a whole lot of aggravation and expense down the road.

In each case, be sure to deal with a qualified insurance representative and compare apples to apples when looking at competing policies. Take time to clarify terms as they may vary from company to company.

Accidents happen; it is a fact. Read the fine print so there won't be any surprises should things take a wrong turn. Life is a journey, so protect yourself with the right auto insurance plan and enjoy the ride.