In order to be able to drive legally motorists should at least buy liability auto insurance coverage, which is compliant with their state’s minimum requirements but providers cannot sell a policy less than this amount for a vehicle in use anyway. However, basics are set to protect the public from motorists who would otherwise have no coverage to compensate for the damages and injuries they caused to third parties. It is never the guidance for how much auto insurance you should have.
Liability vehicle insurance usually has two parts. Bodily Injury coverage pays for injuries a vehicle causes to other people. Property Damage compensates people for their physical losses. 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.
20 states require inclusion of Uninsured Motorists coverage in the minimums as well. Otherwise, this is an optional but very helpful protection against getting hit by an uninsured motorist. Also, no fault states require Personal Injury Protection as part of the minimum.
Providing you own the auto outright, it is totally up to you if you want Comprehensive and Collision coverage to protect your own automobile as well. However, you won’t be given this option when you have a loan on the car because the lender would most certainly insist on proper insurance for the vehicle they lend money for and that usually means a full coverage policy with Liability, Collision, Comprehensive and GAP Insurance.
The function of liability car insurance coverage is often misunderstood by many policyholders who think it is only there to compensate third parties for the damages they cause. Actually, liability coverage protects the policyholder as much as it does the third parties. People are legally responsible for the damages they cause when they are clearly at fault for the accident. And they will have to pay for those damages and injuries out of pocket when they have no or insufficient liability car insurance, even if they have to sell their homes to cover the costs.
It is important to understand the real meaning of the question in the title because “should have” is totally different from “required by the state”. Most experts believe state-imposed minimums aren’t sufficient and many vehicle insurance companies offer policies with higher liability limits than the basics enforced by the laws.
The figures of $100,000/$300,000/$100,000 is the consensus as the safe liability car insurance limits. It breaks down as $100,000 for a single injury, $300,000 for maximum injury payout and $100,000 for property damages. Of course, it isn’t a bulletproof figure by any means since a single car can cost half a million dollars and one simple surgical procedure can cost hundred thousand dollars. But since the question is the minimum you need (and not must have for legal reasons), this is what you should have.
If you purchased a car once you can probably manage to scrape up for another if worse happens. So, with your own vehicle the maximum you can lose is the price it would fetch in the open market. In other words, there is a known upper ceiling to a possible loss. With liabilities, there are no such limits to the damages that can total up, say in case of causing an accident with a bus, train or a Lamborghini. We don’t mean to scare you but these things happen to people.
Many brokers and agents wouldn’t just agree to selling the basic Liability without talking to the customer about the risks they are running. Many brokerage firms may actually refuse to sell it. Furthermore, policies are generally sold as packages in today’s marketplace. Most packages come with substantially larger liability automobile insurance as well as Collision, Comprehensive and Uninsured Motorists Coverage.
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 motorists shouldn’t be scared to look for decent auto insurance coverage. Often, people get frighteningly high first quotes and start chopping and changing initial objectives. It takes only 8 minutes at most to get a quote online so they should get a few before blowing a fuse.