A Suze Orman exclusive

Auto insurance will never qualify as "easy to understand" and that increases the chances you could make a costly mistake. I hope you know that your auto insurance actually provides four different types of coverage: two are mandatory and two are optional. Everybody is required to have Bodily Injury Liability, which provides coverage if you or anyone else is injured, and Property Liability Coverage, in case you damage another car or piece of property. Collision Insurance is an important option for more expensive cars, since it provides coverage no matter who is at fault, as is Comprehensive Coverage, which covers repairs - and replacement - if your car gets damaged in a non-car related mishap. Stuff like a tree limb falling on the hood, or a run-in with a deer.

A typical minimum amount of mandatory coverage is often expressed as 30/50/20. This means you have $30,000 worth of bodily injury coverage for each person, with a $50,000 limit per accident, and then $20,000 in coverage for property damage. My advice is to not scrimp on this coverage. That may satisfy your state's minimum requirements, but you should definitely think about a policy that provides 100/300/50 if you have significant assets. In fact, I would play it extra safe and get 250/500/100 coverage. What you want to avoid is having someone sue you and come after your personal assets - such as your home - to settle an insurance claim. That's putting all your finances at risk to avoid paying a more expensive premium. Not smart, in my book.

I also want you to check with your home insurer about taking out an umbrella liability policy. For about $200 a year or so, you get $1 million in protection; that's a nice bit of protection if you were to ever be sued.

And a special note about the medical coverage. I advise you to be extra cautious about turning down this coverage just because you have a good health insurance policy at work. That may be great for you - but remember that you need to insure everyone who's in your car.

If you are buying an expensive car, I'd also recommend seeing if your insurer offers Replacement Cost Coverage. Typical coverage only pays you the depreciated value of your car, not what it will cost you to go out and buy the same car again. Since cars start depreciating the moment the two front wheels leave the dealer lot, you might want to fork over the bucks to make sure that at least for the first few years you own your car you won't be caught short if it gets totaled.