Choosing auto insurance can be difficult if you are a beginner in that field, especially because there are many options of policies to choose from. However, before purchasing various car policies, there are certain minimum requirements that you need to have by law. Here are are some things to help you understand the minimum car insurance requirements.
1. What are your state’s insurance requirements?
All states have financial responsibility laws that require you to purchase at least liability coverage. State’s minimum liability and property damage coverages are two of the most important coverages you need to have in order to drive legally. If you don’t have any liability coverage, you’ll be responsible for paying the caused costs of any damages or injuries. Other types of auto insurance coverage may be optional or required, depending on the state in which you live.
2. What do the numbers mean in the Minimum State Car Insurance Requirements?
Each state has its own numbers for the Minimum State Car Insurance Coverage. Most states require at least $40,000 of insurance per accident, but some require as much as $100,000 in coverage. For example, the insurance requirement numbers in California are much lower – they are: 15/30/5. It may seem confusing at first, but in reality, these numbers simply refer to the insurance policy limit.
So the first two numbers refer to bodily injury liability limits and the third number refers to the property damage liability limit. The first two numbers in 15/30/5 mean that in an accident each person injured would receive a maximum of up to $25,000 with a maximum limit of $50,000 per accident. Meanwhile, the last number refers to the total coverage per accident for property damage, which in this case would be $20,000.
To make it simpler, imagine that you there are two people in the accident, it means that the maximum will be enough for both of them (2x$25,000=$50,000). However, if there are three people in the accident the maximum will not be enough for all of them (3x$25,000=$75,000). In cases like this, you will end up in a situation where you won’t have enough coverage for the everyone if you choose the required minimum of the state.
3. Minimum car insurance limits may not be enough for protection
Now that you understand what those numbers mean, it becomes clear that in similar cases to the one we mentioned above, the insurance policy limit may not be enough for protecting everyone injured in the accident. To avoid these type of situations, it will better to contact your insurance agent and discuss all your available options and then choose the best coverage for you. You can find the full list of minimum car insurance requirements of all the states by following the link.