I'm working on restructuring the navigation for an insurance company and was curious if there are best practices when it comes to the amount of second-level categories displayed. For instance, say you clicked on "Auto Insurance" from the homepage, what would be the ideal amount of navigation categories listed in that Auto section?
Flat and deep hierarchies can both work well; only user testing will give you anything close to a definitive answer. Kathryn Whitenton's article is typical of many, and she summarises the options thus:
Flat hierarchies tend to work well if you have distinct, recognizable categories, because people don't have to click through as many levels. When users know what they want, simply get out of the way and let them find it.
But there are exceptions to every rule. In some situations, there are simply too many categories to show them all at one level. In other cases, showing specific topics too soon will just confuse your audience, and users will understand your offerings much better if you include some intermediate category pages to establish context.
Observing your users—via usability testing, analytics, and search logs—can help you understand what problems your audience needs to solve, and how familiar users are with your content. This background knowledge is essential to achieving the right balance between a breadth and depth in your hierarchy.
The only best practice would be "as much as you need, as little as you can".
Information Architecture is a quite complex discipline, and getting it right is a quite hard task even for specialist in that area.
About your question, it's impossible to answer it here, but basically you need to start writing down all the pages you have, then group them logically using taxonomies and hierarchies, then start connecting them, following the paths just as any user would do.
You'll find out that MOST OF THE TIMES, 1 sub-level is enough. However, I have seen 3 and 4 levels deep navigations that worked exactly as expected, so again: as much as you need, as little as you can
Finally, the only thing you u need to do after this is.... test, test, test