State Minimums vs Recommended Coverage

Each U.S. state has its own rules that dictate the minimum type and amount of car insurance required to legally drive on public roads. In fact, police during traffic stops ask drivers for their license, registration and proof of insurance. Fail to show you’re insured, and you could be looking at a hefty fine!

However, just because it’s legal to drive down the road with your state’s minimum requirements, are minimum requirements really enough? We don’t think so.

While insurance is yet another expense of living that we’d all prefer not to deal with, going for the bare minimum may save you money now, but you could be setting yourself up for huge expenses down the road.

Consider these scenarios:

You cause an accident that results in multiple injuries to other drivers. The other motorists’ medical costs far exceed your policy’s ability to pay, and they sue you for damages not covered by your policy.

Your car is totaled when you are hit by an uninsured driver. They go to jail, but you’re stuck without a car and medical bills to pay out of pocket.

After buying a $30,000 new car, you cause an accident with totals your car. Your liability policy covers the other driver’s losses, but your policy does nothing to cover the $30,000 loss of your car.

Unfortunately, these very scenarios happen every day to drivers who roll the dice with minimum coverage.

This is why it is always recommended to purchase at least the following levels of coverage if afford them.

• $100,000 for bodily injury (total per individual): This is the maximum amount that each person will receive for bodily injury caused in an accident. For example, two people would receive $100,000 each maximum, although generally speaking, treatment for minor accidents will never reach that level.
• $300,000 for bodily injury (total per accident): This is the maximum amount that can be paid out for all personal injuries sustained in a car accident. For example, if the two people above received $100,000 each for a total of $200,000, then the payout would be within the $300,000 limit. However, if two other persons were injured, then just one other person would be covered at $100,000 to reach the $300,000 limit. The fourth person would not be covered by your insurance and, therefore, would have to sue for any medical costs that they incur.
• $100,000 for property damage (total per accident): This the maximum amount that will be paid out for any property damage. This primarily includes damage to vehicles but also could include damage to structures, street signs, light poles, etc.

It would take a fairly serious accident to hit these limits; however, almost any accident could exceed your coverage if you purchase a policy that meets minimum state guidelines and no more. For example, here are the minimum guidelines for the State of Florida:

• $10,000 per person for bodily injury
• $20,000 per accident for bodily injury
• $10,000 per accident for property damage

As you can see, these limits are several times less than our recommendations. It doesn’t take a lot of imagination to picture an accident that exceeds the cost of this very minimum level of coverage, leaving you wide open for lawsuits and other out-of-pocket expenses – not to mention that liability insurance won’t cover your expenses if you are at fault in an accident.

Bare-bones liability insurance may get you on the road legally, but it is usually terribly inadequate in real-life situations.