Regardless of the state you live in, you must have liability auto insurance if you drive. Driving without liability insurance is against the law. There are many other insurance options above and beyond the basic liability policy, but if you're going to drive, you are required to carry a minimum amount of liability protection.
Liability auto insurance should cover damage to the other party's vehicle in an accident for which you were at fault, plus any damage to property that was in the vehicle. Liability coverage may also apply to nearby dwellings and other property surrounding the scene of the collision.
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