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Auto insurance limits are a tricky subject. Some people are comfortable with low limits because they “never get into accidents”. Other people buy too much insurance and end up paying thousands of extra dollars for car insurance over the lifespan of their vehicle.

What auto insurance limits should you have? Today, we’re answering all your questions about the amount of coverage you should have in any state in America.

You Are Legally Required to Have a Certain Amount of Auto Insurance

auto insurance limitsEvery state but New Hampshire requires drivers to have a certain bare minimum amount of car insurance.

This is called liability coverage. Liability coverage pays for the medical expenses of people you injure. It also pays for property damage – like the other vehicle you hit or the fence you damaged. Basic liability insurance protects your assets from a lawsuit (assuming you have enough coverage) but it does not cover damages to your own vehicle.

In other words, if you just want to legally drive on the roads, then you need liability coverage. It protects other drivers – not you. The law requires you to protect other drivers. It does not require you to protect yourself (at least in most states).

It’s Recommended You Exceed the Minimum Liability Car Insurance Requirements

Yes, each state has its bare minimum car insurance requirements. However, most insurance agents will recommend exceeding the minimum required coverage.

If you can afford it, then it’s generally in your best interest to buy more auto insurance coverage than the bare minimum.

The reason is simple: some states require just $10,000 or $20,000 of liability coverage per accident. If you get into a serious accident, then the damages and medical expenses will quickly exceed your coverage limits.

For that reason, many drivers choose to double or even triple the minimum liability coverage in each state. Many drivers also opt for full coverage, which includes collision coverage and comprehensive coverage along with liability coverage.

Minimum Car Insurance Requirements by State

Each state has its own unique car insurance requirements. Here are the minimum car insurance requirements for drivers in the state of California:

Bodily Injury Liability Coverage: $15,000 per person / $30,000 per accident

Property Damage Liability Coverage: $5,000

Uninsured Motorist Bodily Injury Coverage: $15,000 per person / $30,000 per accident

Uninsured Motorist Property Damage Coverage: $3,500

All of the numbers above are considered “minimums” for the state of California. These are the bare minimum requirements if you want to legally drive on the road in California. If you get pulled over and you’re unable to provide proof that you have car insurance that meets the minimum requirements above, then you will face legal repercussions.

Insurance companies will advertise policies that meet or exceed these limits. If you see an insurance policy advertising 15/30/10, it means that the policy offers:

  • $15,000 of bodily injury liability coverage per person
  • $30,000 of bodily injury liability coverage per accident
  • $10,000 of property damage liability per accident

In this situation, your insurance company will pay up to the limits of your policy. If you’re at-fault in a collision with another driver, and the other driver suffers $12,000 of medical expenses, then your insurance company will pay the full $12,000. If the other driver requires $18,000 worth of medical treatment, however, then your insurance company will cover the first $15,000 and the remaining $3,000 will be paid out of pocket.

How Much Car Insurance Should You Really Have?

Up to this point, we’ve focused exclusively on how much car insurance you’re required to have.

However, there’s a big difference between maintaining the minimum required car insurance requirements and maintaining the recommended car insurance limits.

So how much car insurance should you really have?

Here’s one of the most important things to consider:

  • If you’re young and you have no assets to protect, then buying car insurance with high liability coverage limits may be unnecessary. In this situation, it would be pointless for the other party to sue you.
  • If you’re older and have a home and savings, however, then you may want to buy additional liability insurance. You have more assets that could be affected by a lawsuit.

Let’s say you only have $10,000 in liability coverage. You hit an SUV filled with a family. The damage to the vehicle exceeds $50,000. Each family member has over $30,000 in medical bills. Your insurance company will happily cover the first $10,000 in damages – but you’ll need to pay the remaining amount out of pocket. That means tens of thousands of dollars of damage that you’re legally required to cover.

To avoid this situation, some drivers will buy car insurance policies with $1 million or $2 million in coverage. In fact, some insurance experts only recommend car insurance policies with at least $1 million or $2 million in coverage.

Conclusion: How Much Risk Are You Comfortable With?

Generally speaking, you’ll want to buy more car insurance than what is required in your state – assuming you can afford paying slightly higher premiums per month.

If money is tight, however, and you don’t mind assuming higher risk, then there’s nothing wrong with meeting the bare minimum requirements in your state. You don’t have much protection, but you’re able to legally drive on the road.

Many experts recommend exceeding the bare minimum limits in each state, up to a level you feel comfortable with. Some drivers don’t feel comfortable with under $1 million in coverage. Others feel comfortable with $50,000 or $100,000 in coverage. Ultimately, it’s up to you to determine how risk-averse you are.

Are you willing to pay slightly more today to avoid significant trouble in the future? Or would you rather save a bit of money today while hoping that nothing bad happens in the future?