What Is the Minimum Auto Insurance You Need?

The minimum car insurance coverage required in each state is designed to establish a baseline level of financial responsibility for motorists. It ensures that drivers have at least some insurance coverage in case they are involved in an accident and are found to be at fault. This helps protect the interests of the public. However, it’s important to note that the minimum required coverage is often just that—a minimum. It may not provide adequate protection in many situations. Motorists may need to consider making following additions to their basic coverage to be protected better:

Consider Increasing Liability Vehicle Insurance Limits

Depending on the severity of an accident, these minimums may not adequately cover the expenses that can arise from a serious accident, including medical bills, property damage, and legal liabilities. To safeguard their financial well-being, drivers should assess their unique circumstances, assets, and potential risks. Insurance experts often advise purchasing coverage that goes beyond the minimum requirements to ensure sufficient protection in case of accidents.

Liability automobile insurance usually has two parts. Bodily Injury coverage pays for injuries and Property Damage pays for physical losses third parties suffer in an accident you caused. Usually both come with upper limits, which are denoted like 25/50/10, in which $25,000 is the maximum limit of coverage in the policy for one injured person and $50,000 for all injuries. $10,000 is the maximum amount payable for all physical damages.

Most experts recommend more comfortable vehicle insurance liability coverage limits of 100/300/100 to cover a modest accident you cause in the current environment of expensive medical costs and vehicles.

Consider Adding Collision and Comprehensive Coverage

Furthermore, people invest a substantial amount of money on automobiles. And some people may have borrowed money to buy the car they want or need. In such cases, it is often necessary to add at least Collision and Comprehensive coverage to your car insurance to protect the vehicle against damages it may sustain in accidents and other incidents like theft, vandalism, fire and acts of nature. Besides, your lender or leasing company is likely to insist on these covers to protect their investment.

And if you have a loan or you leased your auto, you may need to consider GAP insurance that pays any shortfall between your loan and what your auto insurance would pay if your auto is totaled or stolen.

Consider Personal Injury Protection

No fault states and few others require Personal Injury Protection as part of the minimum required in those states. PIP pays for your and your passengers’ injuries and other related costs, regardless of fault. Few states require Medical Payments coverage that pays for your and your passengers’ injuries as well. PIP may be available in your state if you want to add it to your policy, even when it isn’t mandatory. PIP may be extra beneficial for motorists who don’t have health insurance.

Consider Uninsured Motorist Coverage

About twenty states require inclusion of Uninsured Motorist coverage in the minimums as well. Uninsured Motorist Bodily Injury (UM BI) pays for your and your passengers’ injuries and Uninsured Motorist Property Damage (UM PD) pays for property damages when the accident is caused by an uninsured driver. Otherwise, this is an optional but very helpful protection against getting hit by an uninsured motorist. If you have good health insurance or PIP you may not need UM BI coverage. And you may not need UM PD if you have Collision Coverage.

Other Optional Vehicle Insurance Coverage

Furthermore, motorists can add roadside assistance, rental car reimbursement coverage and other add-ons to their policies depending on their needs and budget.

Some people buy car insurance to comply with the laws and be able to drive legally. It is understandable to go for the minimum enforced if you are finding it hard to pay for even the lowest premium. But vehicle insurance coverage offers many other benefits than complying with the legal requirements and therefore, it is worth considering other coverage options.

Potential Cost Implications of Your Choices

Obviously minimum state-required automobile insurance coverage is the cheapest option but as discussed above it provides limited coverage and may not meet the needs of many motorists. The average cost of a minimum state-required liability-only vehicle insurance policy in the US is $622 but it can be substantially higher or lower depending on your state and your driving records, age, credit score and vehicle details.

Should you decide to enhance your car insurance policy with Collision and Comprehensive coverage, you can anticipate your premium increasing by a factor of 3 to 5, depending on your state of residence and personal details. For reference, the average cost of a full vehicle insurance policy, which includes Collision, Comprehensive and Liability coverage, is $2014 in the US. However, this figure, too, can fluctuate substantially based on your state of residence and the factors mentioned earlier, including the make, model, and value of your vehicle. Consequently, it is crucial to ensure that you have the means to cover the expenses of repairing or replacing your automobile before considering dropping Collision and Comprehensive coverage in an effort to save money.

Please bear in mind that each individual and their specific auto insurance needs are distinct, and as such, it’s essential to consider the level of coverage your would be comfortable with. It’s advisable to obtain multiple insurance quotes and assess whether they align with your financial constraints. If you find yourself struggling to make a choice, reaching out to an independent agent is a prudent course of action. These professionals can elucidate the intricacies of selecting a particular coverage plan and assist you in striking a suitable balance between your protection requirements and budgetary considerations.