Why Liability Insurance is Required in Most States

Chances are, if you live in the U.S., you are required by your state’s laws to purchase minimum car insurance protection in order to own or operate a motor vehicle. In most states, minimum insurance laws require that drivers only purchase liability coverage, rather than a more comprehensive policy. There are several reasons why minimum liability insurance is required.

Protecting Other Drivers

Liability insurance is required to protect other drivers from any bodily injury or property damage losses that you cause. In most states, you are legally responsible for the harm and loss that you cause another person, and auto insurance helps guarantee that victims have access to the medical treatments, auto repairs and property replacement they deserve following an accident.

Protecting You

Minimum liability insurance not only protects victims of an accident you cause, but it also protects you. Regardless of whether you have auto insurance, you can still be held legally responsible for the losses you cause another person. If you do not have insurance, a victim may sue you directly, which could result in a liquidation or seizure of your personal assets if you do not have the cash to pay a judgment out of pocket.

Considerations

It is never a good idea to drive a vehicle without adequate insurance coverage. Unfortunately, even state minimum coverage may not be enough to protect you in the event of an accident. Talk to your insurer about the cost of increasing your coverage to provide full coverage protection for both yourself and others you are liable for. And as always, be sure to shop and compare premiums to be sure you are getting the most coverage at the most affordable rates. The rates you pay for state minimum coverage at one provider may buy you much more coverage through another.

What Are the State Minimum Liability Limits?

What Are the State Minimum Liability Limits?Every state in the U.S. imposes minimum liability insurance requirements on its drivers. Although the amounts vary from state to state, they all serve the same intended purpose: To financially protect other drivers against bodily injury and property damage incurred in an accident for which they are not at fault.

The minimum amount of auto insurance you must personally carry depends solely on the state in which you live and drive. For example, New Jersey, California, Delaware, Pennsylvania and Massachusetts all have very low property damage liability limits. In those states, you only need $5,000 of coverage for the damage you cause to another person’s vehicle or property. Many other states, however, such as Mississippi, Alaska and Maine, require a minimum of $25,000 of liability coverage for property damage.

State minimum bodily injury limits are typically higher and divided into two categories – the amount an insurer will pay for one person injured in an accident and the total amount an insurer will pay for all people injured in an accident. If you are in Oklahoma, Florida or Louisiana, you are only required to carry $10,000 per person, per wreck with a maximum of $20,000 per accident. Alaska residents, on the other hand, are on the hook for a bare minimum of $50,000 per person with a maximum of $100,000 per accident.

Driving Without State Minimum Coverage

If you choose to drive uninsured or underinsured, you could be facing serious consequences. The laws vary by state, but in some places, you could lose your license for as much as a year or have your vehicle impounded for driving without state minimum coverage. That is in addition to the fines, penalties and court fees you are almost certain to have to pay. Additionally, the offense could go on your permanent driving record for potential employers to see.

Considerations

Keep in mind that just because you have met your state’s minimum liability limits, it doesn’t necessarily mean you have enough auto liability insurance. Some states have notoriously low minimum insurance limits that wouldn’t even pay for half of the damage to a new vehicle. Others may have adequate liability limits for the average driver, but not enough to protect the assets of someone with a lot of savings, investments or property to lose.

You should speak with your insurance agent to determine how much coverage you personally need in the event of an accident. Remember, just because you max out your auto insurance benefits, it doesn’t mean you are not still liable for the damages or losses you cause another driver or passenger.