Car insurance coverage minimums fulfill each state\u2019s insurance requirements, but what happens if they\u2019re not enough \u2013 you\u2019re on the hook. The reason being \u2013 while the main role of auto insurance is to protect us and our family from possible financial hardship in case of a loss; too often, people drive around with the absolute barebones minimum coverage and leave themselves vulnerable to the very hardship they\u2019re trying to avoid.<\/p>\n\n\n\n
Unfortunately, this is a result of not taking into account the potential for their whole world to be turned upside down in the event of an accident, even a relatively minor one in which they\u2019re at fault. Because insurance is regulated at the state level, each of the 50 states and Washington D.C. adhere to their own insurance laws as they relate to automobile insurance. And, since each state stands alone, the insurance laws can vary somewhat between them.<\/p>\n\n\n\n
The most regulated form of coverage the states have in common is liability, which protects an insured individual when they\u2019re responsible for injuries to another individual or for damage to something another individual owns, such as a car. Under the majority of states\u2019 insurance statutes, you\u2019re required to purchase the least amount of liability insurance allowable before you can legally operate a vehicle on public roads.<\/p>\n\n\n\n
Again, keep in mind that each state may differ in their minimum requirements, including those who offer no-fault insurance coverage, such as Kansas and a dozen or so other states. However, in a non-no fault state, using the base requirements below, you could find yourself in a financial nightmare that may be difficult to wake up from.<\/p>\n\n\n\n
Before breaking down the numbers, it\u2019s important to understand each item and what they all mean to you in an accident. Now, using the same liability insurance minimums, let\u2019s say you hit a late model BMW SUV and cause $15,000 of damage, which is not that hard to do on high-end vehicles. Riding in the car are four people and all sustain injuries. If each person requires $10,000 worth of medical treatment, that means, according to your aggregate total of $30,000, you\u2019ll be out of pocket another $10,000 to cover the fourth injured party, which your insurance isn\u2019t paying for.<\/p>\n\n\n\n Still, more bad news could be coming your way. Remember, you hit a BMW SUV and the damage was $15,000\u2026and, your insurance company is writing out a check to the owner for only $5,000 because that\u2019s all they\u2019re covering for the damage to the other car.<\/p>\n\n\n\n This means\u2026you\u2019re stuck holding the bag for another $10,000 to cover the difference, leaving you with an additional $20,000 total between the two you\u2019ll need to come up with.<\/p>\n\n\n\n That\u2019s why getting more insurance coverage makes sense. It\u2019s a relatively inexpensive safeguard against possible financial ruin. And, raising your liability insurance is often more affordable than you might think. Check with your insurance agent or shop around for the best rate.<\/p>\n\n\n\n Don\u2019t be penny-wise and dollar foolish, make sure you have enough liability coverage and also make sure you\u2019re getting the best rate on your auto insurance.<\/p>\n\n\n\n
1. Bodily injury or death to one person<\/strong> \u2013 This is the amount your insurance company will pay out for medical costs or death of any one individual in an accident you caused. But, it does not include covering burial costs if the person dies from their injuries. Furthermore, if their family sues you, that\u2019s the absolute maximum your insurance company will pay for.
2. Bodily injury or death to more than one person \u2013<\/strong> This is the aggregate total your insurance company will pay out for all the people injured or killed in the crash. In other words, if three people were seriously injured at a cost of $15,000 each, your insurance company would only pay out $30,000 total.
3. Property Damage \u2013<\/strong> This is the total amount your insurance company will pay out for damage you caused to property in the accident, including the other car, buildings, walls or fences, etc. If it doesn\u2019t involve people, this category pays for the damages only.<\/p>\n\n\n\n