When you own a vehicle, most states make it compulsory that you get auto insurance. Buying a car can be costly and you may think that getting car insurance may be extra costs. The good news is that it protects you, your family and the vehicle in the event of an accident or damage.
All states require that you have at least a type of insurance or proof of financial responsibility. However, these car insurance policies vary depending on the state. These state car insurance requirement laws are what we refer to as the minimum insurance.
There are two types of state system laws that are used in governing different states. They include tort laws and no-fault laws. In a no-fault state, a driver maintains an insurance cover to cover for losses incurred in an accident without regarding the fault. Whereas states governed using tort laws will require the person who is at fault to pay the victim’s medical expenses and damages.
In most states such as in the United States, driving without an insurance cover is illegal, a violation of the law. For this reason, you must understand the minimum state insurance regulations of your state so that you can drive around legally. Most importantly, get car insurance that will best meet the minimum state insurance needs.
Like I said before, some states do not require you to have car insurance in their laws. An example is New Hampshire. However, in the event of an accident, the law requires that you take care of personal injuries on you and others as well s the property damages
Features of State Minimum Car Insurance
Car insurance or auto insurance is a contract between an insurance company and a policyholder. The policyholder, in this case, is the owner of the motor vehicle who agrees to pay a monthly fee known as premiums to an insurance company, while the insurance company agrees to pay for the losses defined in the policy.
In this article, we have compiled the four most basic types of coverage that many states include in their state minimum car insurance.
- Bodily injury liability
This is the main coverage for any insurance policy. This covers the insurer when he or she as the designated driver causes injury to another person using the insured vehicle. In some cases, the policyholder may have been driving someone else’s car, with permission, and causes harm to another. This scenario will also be considered and the person will receive cover as per the policy. Coverage is defined per individual and per accident.
- Property damage liability
Did you cause damage to somebody else’s property using your car? The property damage coverage will get you covered. This type of cover only takes care of damages to the things that you become responsible for which do not belong to you. If you damage your own car in the event, your car is not covered.
For example, you hit another person’s mailbox or hit a guard rail. These damages will be compensated for because they do not belong to you.
Property damage liability is defined per accident.
- Personal Injury Protection and med pay
This is also known as PIP. It is defined per person and per accident. The specific policy varies state by state which may either offer one or both policies. There are limits for coverage on medical expenses, funeral, loss of income or disability among others.
Assuming you come from a no-fault state, the PIP will cover more comprehensively and take care of your medical expenses, the wages you lost as a result of not working after the accident or even extra things like taking care of your lawn just in case you used to perform the task but after an accident, you can no longer engage in the task.
Med pay covers the injuries of passengers who were in a covered vehicle with no regard to their health insurance. In most cases, it is usually limited to $25,000 coverage or even less. There is no consideration whatsoever for who faulted in the accident in order for it to payout.
Note.PIP has got a minimum coverage amount and a maximum coverage limit per person.
- Uninsured Motorist coverage (UM)
This is a provision for coverage in the event that a driver who has no insurance which meets the minimum state requirements is found to be at fault in the event of an accident. In some instances, the driver might be a hit and run, this would be put under the category of uninsured motorists. Another instance is that the at-fault driver has insurance but the company is unable to pay the claim.
The UM coverage is an add on coverage for car insurance policies that help pay for the injuries and damages which an uninsured driver caused. This policy is important because if you are holding a regular car insurance policy and you get involved in an accident with another party who is uninsured and at fault, you may not receive any payment at all.
The Numbers in the Minimum State Car Insurance Requirements
Most states require at least some level of liability.
A coverage limit, which is the highest amount an insurer will pay in case of an accident. Liability is covered mainly on any car insurance policy. You may find some numbers written on your declaration page such as 25/50/10. This is where numbers now come into play since the limits come expressed as a number series.
There are three components in the coverage of a car
- Bodily injury coverage per person
- Bodily injury coverage per person
- Property damage coverage per accident
For Example, let us assume we have 25/50/10 coverage. What does it mean?
- 25 means that insurance could pay up to
$25,000 maximum for a single person injured.
- 50 means that up to 50,000 could be paid
to cover for multiple people in a single accident.
- 10 covers for property damage on someone’s
property up to $10,000.
These values vary per state as each state has got
Injury Limit (per person)/ Bodily Injury Limit (per accident)/ Property Damage
Let us get this right. The first two numbers cover for labilities. In the event that the minimum legal requirements are 25/50 for liability and the casualties are two people needing $25,000, the maximum of $50,000 will cover adequately. In another scenario, should we have 3 people who are injured and the costs needed are $25,000 per person, the limit would not be sufficient. Therefore, the first two people to file a claim will be the ones to access the funds while you end up in a difficult financial situation if the fault was yours. You may end up being sued.
All that being said, are you aware of your state minimum car insurance requirements? Below is a link to help you with that.
These limits are just the minimum states require and gives you the legal right to drive a car. However, they do not limit you to only the state values. If you feel that you are not comfortable with these limits in your state, contact an insurance agent and discuss your options since the state minimum limits may not cover for all liability and property damages. You can pay a little more and raise your car insurance limits.
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