In most states, motorists are legally required to carry liability auto insurance. There are also state laws that outline the minimum amount of coverage that a driver has to purchase. This is considered “bare-bones” coverage. While it will ensure that you meet the requirements of your state, the minimum amount of liability insurance will not protect you or your property (your car) from any damages that arise in an accident that you are responsible for causing. It will, however, help to cover the costs of third-party injuries and property damages; in other words, it will assist with the medical bills and vehicle damages that someone else you have a collision with sustains.
However, while carrying the minimum amount of liability auto insurance might be enough to ensure you meet the laws of your state, it might not be enough to protect other drivers – and you – in the event that an accident does occur.
Understanding the State Minimums for Liability Auto Insurance
Generally, auto liability coverage requirements are written out in three numbers: The first number represents the amount that is needed to cover injuries to one person, the second number illustrates the amount of coverage that is needed to cover the injuries of two or more people, and the last number highlights the minimum amount of coverage that is needed to cover the cost of property damage.
For example, in New York, the minimum amount of liability coverage is 25/50/10; $25,000 to cover the cost of bodily injuries for one person, $50,000 to cover the injuries of two or more people, and $10,000 to cover the cost of damages another person’s vehicle sustains.
The amount of liability coverage required in each state differs. For instance, in North Carolina, the limits are 30/60/25, in Alaska, it’s 50/100/25, in California, it’s 15/30/5, and in Louisiana, the minimum amount of coverage required is 15/30/25. To find out how much liability insurance you are required to carry in your state, check with your local Department of Motor Vehicles, or with an insurance agent.
Is the State’s Minimum Amount Enough?
While it’s true that carrying the minimum amount of liability auto insurance will ensure that you can legally operate your car, it doesn’t mean that your policy offers enough coverage.
The amount set for each part of liability insurance – third party injuries and third party property damages – is determined by the estimated average amount that it injuries and damages cost. For instance, in the State of New York, medical bills for one person injured in an accident are estimated to be $25,000 or less, the medical bills for two or more people injured in an accident are estimated to cost $50,000 or less, and on average, property damages are valued at $10,000 or less.
But what happens if you are involved in an accident that causes injuries or property damages that exceed the minimum amount that your state requires? Unfortunately, you are responsible for paying the remaining amount that your policy will not cover. For instance, if the minimum coverage for one person’s injury is $10,000, and in reality, someone sustains $17,000, you would be responsible for paying the $7,000 of medical costs that your insurance doesn’t cover out of your own pocket.
Furthermore, what if you live in a state that only requires liability coverage and doesn’t require underinsured/uninsured motorists coverage? Currently, only 13 states require motorists to purchase this type of coverage, which offers protection to drivers if they are involved in a collision with someone who doesn’t carry enough insurance, or isn’t insured at all, and that driver is responsible for the accident. If your state doesn’t require this type of insurance and you are hit by someone who is underinsured or uninsured, you would be responsible for paying for the damages – even though they aren’t your fault.
What Can You Do?
While the minimum auto insurance that drivers are required to carry in each state are meant to protect you, other motorists, and even pedestrians, all too often, that isn’t the case; the minimum requirements do not provide adequate protection. So, what can you do to ensure that you are properly protected?
The answer to that question is simple: carry more coverage than your state requires. But how much more should you carry? Speak to a reputable insurance agent that specializes in auto insurance to find out if investing in coverage that exceeds your state’s minimum requirements is worth your while, and if so, how much more you should invest in.
The Bottom Line
While carrying the minimum amount of auto insurance required by your state will ensure you are operating your vehicle legally, those minimums might not offer the protection that you really need. For added security and peace of mind, carrying more insurance can certainly be a worthwhile investment.