What are the minimum auto insurance requirements?

FREE Auto Insurance Comparison

 Secured with SHA-256 Encryption

Compare quotes from the top auto insurance companies and save!

Things to Remember...
  • While minimum automobile coverage may seem like a great idea because the monthly premiums will be much lower, it is important to understand exactly what state minimums for auto insurance really entails
  • States mandate certain levels of automobile insurance as a way to protect the car owner, as well as the general public, against extreme financial loss in case of an accident
  • Most states require a person owning a car to have minimum car insurance coverage through a licensed insurance company that provides automobile coverage
  • The state’s Insurance Commission sets the minimum automobile insurance requirements, but most insurance companies will inform people that the minimums are not enough to provide adequate coverage for their liability

Minimum levels of auto insurance are mandatory in most states.

If an individual owns a new car they will usually get maximum amounts of coverage, but many times people that own older cars with high mileage, or have cars that are completely paid off will only select the minimum required amounts of car insurance.

While minimum automobile coverage may seem like a great idea because the monthly premiums will be much lower, it is important to understand exactly what state minimums for auto insurance really entails.

Finding the right coverage means making comparisons and seeing your options. Enter your ZIP code into our FREE auto insurance comparison tool to see coverage and price options!

Automobile Insurance Coverage

AdobeStock_87768368-1600x1600

States mandate certain levels of automobile insurance as a way to protect the car owner, as well as the general public, against extreme financial loss in case of an accident.

If car insurance was not mandatory and a person experienced a serious accident, the people in the other car would have to incur medical and personal expense to cover any injuries or harm to property.

By having automobile insurance, the person with the insurance that caused the accident would not be liable for the total amount of damages as defined in the insurance policy.

The insured person would be liable only for their deductible, which is the amount they have to pay before the insurance company begins to make the remaining payments.

Automobile insurance, therefore, provides the insured person with the safety on knowing that as long as they pay the insurance premiums the insurance company will agree to pay for damages that are specified in the insurance policy.

FREE Auto Insurance Comparison

Compare quotes from the top auto insurance companies and save!

 Secured with SHA-256 Encryption

Understanding Minimum Automobile Insurance Coverage

Most states require a person owning a car to have minimum car insurance coverage through a licensed insurance company that provides automobile coverage. There are three areas that must be covered by the law:

  • Personal Bodily Injury Liability – this part of the insurance policy provides coverage for any medical bills, pain, and suffering, or other medically necessary expenses resulting from a car accident.
  • Maximum Allowable Amount – this is the total amount of monies an insurance company will pay for medical expenses per accident.
  • Property Damage the total amount the auto insurance company will pay for damage to property per accident. This amount covers the damage to another person’s car as well as other property that was damaged in the accident. If the person who is insured is found to be at fault for an accident they would be responsible, through their insurance company, for the cost of damage repair.

Here is how minimum auto insurance coverage works. There are generally three numbers that a person will see when looking at state-mandated minimum automobile insurance coverage. The numbers appear as 25/50/30.

These numbers refer to bodily injury liability and property damage liability in dollar amounts.

  • The 25 refers to the fact that the insurance must provide up to $25,000 coverage for the first person filing an injury claim in an accident
  • The second number, 50, is the maximum amount insurance coverage must for any personal injury claims filed by the insurer or any other person involved in an accident, or $50,000
  • The third number, 20, means that the auto insurance coverage must provide a maximum of $20,000 to pay for property damage

This minimum coverage may seem to provide total coverage; however, it depends on how many people were injured in the accident.

If three or more people sustained injuries and the total amount of medical expenses equaled more than $50,000, the insured person could then be personally sued to recover any remaining medical bills as a result of the accident.

If all the people involved in the accident did not incur costs equaling the $50,000 then everyone’s medical bills would be covered by the insurance company.

Depending on the severity of the accident, the person at fault for the accident could potentially find themselves being sued for medical expenses that exceed state-mandated minimum coverage amounts.

State Minimum Automobile Insurance Coverage

AdobeStock_74638728-1600x1600

The state’s Insurance Commission sets the minimum automobile insurance requirements, but most insurance companies will inform people that the minimums are not enough to provide adequate coverage for their liability.

Auto insurance policies for newer cars are rarely written for state minimums, as it could leave the financial institution that holds the lien on the car not having enough money to pay off the car if it is totaled in an accident.

State minimum amounts are also very risky for the insured, as one serious accident where the insured driver is at fault could be devastating to their finances.

Purchasing Automobile Insurance

When considering purchasing state minimum automobile insurance coverage always check the state’s Insurance Commission website to determine exactly what those minimums are for the specific state.

Then speak with several automobile insurance companies to determine whether or not they will write a policy for state minimum requirements.

It is important to take into consideration that the person seeking state minimum auto insurance may own an older car that does not have a lot of resale value, but the car the person hits may be a late model luxury sedan.

If the minimum state requirements will not provide enough coverage for the total repairs to that late-model luxury sedan, the owner can sue the person who caused the accident for the remainder of the money.

Comparison Shopping

It is always recommended that a person interested in car insurance contact several automobile insurance companies to compare quotes and coverage levels.

Even when purchasing state minimum required coverage, comparison shopping makes sense as costs may differ depending on the insurance company. Make sure compare rates by using our free insurance comparison tool below!

FREE Auto Insurance Comparison

Compare quotes from the top auto insurance companies and save!

 Secured with SHA-256 Encryption

[0-9]
[0-9]