The minimum coverage your state requires is designed to protect other drivers, not you. In California, minimum liability is just $15,000 per person for injuries. A single night in the ER can exceed that. If you cause a serious accident with state minimums, you're personally liable for everything above your coverage limits - and that can mean wage garnishment, liens on your home, and bankruptcy.
Most financial advisors recommend 100/300/100 coverage - that's $100,000 per person for injuries, $300,000 per accident, and $100,000 for property damage. This costs roughly $40-$80 more per month than state minimums but protects against catastrophic financial loss. If your net worth exceeds $300,000, consider adding an umbrella policy for an extra $1-2 million in liability protection at minimal cost.
Collision and comprehensive coverage require different math. If your car is worth less than $3,000, you're probably better off dropping these coverages and self-insuring. With a typical $500-$1,000 deductible, you'd only get $2,000-$2,500 for a total loss. If you're paying $800/year for this coverage, you're essentially buying a $2,000 payout for $2,400 over three years - terrible math.
Medical payments coverage fills a critical gap. Your health insurance might not cover passengers in your vehicle, and it definitely won't cover them quickly. Med pay provides immediate funding for medical bills regardless of fault, preventing friends or family from needing to sue you to cover their hospital costs. It costs $30-$50 annually for $5,000-$10,000 in coverage.
Your risk tolerance should drive your decision, not just your budget. If you have substantial assets to protect, maximize liability coverage. If you drive an older car and have emergency savings to replace it, drop collision and comprehensive. The goal is protecting yourself from financial ruin while not overpaying for coverage you don't need. Run the numbers for your specific situation instead of accepting whatever your agent suggests.