The basic legal insurance requirements in any given state is also known as the state minimum insurance.
While most states mandate some form of car insurance, the specific coverage amounts required differ from state to state.
What Is Minimum Car Insurance?
New Hampshire is the only state that does not require a minimum amount of car insurance liability coverage.
This form of liability coverage is intended to help pay for any damages you cause in a car accident. Car insurance liability coverage consists of the following core components:
- Bodily injury coverage (both per person and per accident)
- Property damage coverage (per accident)
Consider, also, the following types of insurance:
- Underinsured or uninsured coverage: Although only around half of the states in the US mandate underinsured or uninsured coverage, it is nevertheless worth considering. This form of coverage can be invaluable if you are involved in an accident with an uninsured motorist.
- PIP (personal injury protection): Only one-fifth of states require PIP coverage. This coverage helps pay the medical costs of all parties injured in the accident, regardless of who caused the accident.
- Medical payments coverage: Medical payments coverage can also help with covering the costs of medical expenses after an auto accident. This is a requirement in both Pennsylvania and Maine.
How are coverage limits determined?
These limits are determined according to the type of coverage.
Car Insurance Coverage Limits
State law mandates auto liability coverage limits. Every state sets minimum liability limits that motorists must purchase.
Remember, these are minimum limits that you should consider a starting point for coverage. You may want to boost these liability limits by purchasing extra coverage.
Auto liability insurance
Liability insurance is intended to cover the cost of damages you cause to another motorist. Most states – New Hampshire is the exception – require some degree of liability, covering bodily injury (per person and per accident), as well as limited property damage coverage.
Comprehensive and collision coverage
Limits for comprehensive and collision coverage equate to the current cash value of your vehicle. If your car is totaled, your policy can pay up to the present market value of the vehicle. This accounts for vehicle depreciation.
Coverage Limits for Home Insurance Policies
You can also choose limits for other coverages, personal property coverage and dwelling coverage, for instance.
Limits for insurance will impact your premium – the higher the limit, the larger the premium.
So, if you are involved in a covered claim, you first pay any deductible out of pocket, and then insurance should help meet the remaining costs, up to your chosen coverage limits.
Do All States Require Car Insurance?
Now, not all 50 states mandate coverage, and many states provide alternatives to coverage from insurance companies.
Even if you live in a state with no requirement for car insurance, it is unwise to drive uninsured. While a state like New Hampshire may not require motorist take auto insurance, motorists are still liable for the costs incurred by an accident. If you are found to be at-fault for an accident, you might not be fined for driving without auto insurance, but you will still be held liable for the costs.
In New Hampshire, car insurance is not compulsory. That said, residents are still liable for damages caused by a car wreck. Motorists will be held liable for $25,000 for property damage, and $50,000 for liability. If you cause an accident when driving uninsured and cannot pay for damages in New Hampshire, expect your license and registration to be suspended.
Residents of Virginia can also avoid taking car insurance if they instead pay $500 annually to the state. This fee does not provide any form of accident coverage, though. If you choose to forego auto insurance in Virginia, you will still be liable for damages if you cause an accident.
When a motorist opts out of auto insurance, they must carry copies of bonds proving financial responsibility. This proof must be provided if requested during ticketing for traffic violations. Failure to provide this proof upon request may lead to your license and registration being suspended. To get these reinstated, you will be required either to take insurance coverage or to provide proof of financial responsibility. Repeat offenders are often required to take insurance for a stated period, often three years.
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Frequently Asked Questions (FAQs)
How do you get cheap car insurance?
While only four insurance companies control over half of all auto insurance business in the United States, you should explore some of the smaller regional carriers. Not only do this companies often have superior customer satisfaction ratings, but they may offer cheaper insurance rates, too. Your credit score also impacts quotes you receive for auto insurance, with the exception of Michigan, Massachusetts, California, and Hawaii. According to insurers, credit scores correlate with the chances of filing a claim.
What is comprehensive car insurance?
Comprehensive insurance is intended to pay for vehicle repairs or replacement in the event of theft or damage in an incident that doesn’t qualify as a collision. For this reason, comprehensive coverage is sometimes called other than collision coverage. Falling objects like hail or trees, vandalism, and fire are the most common examples where comprehensive coverage is applied. For those renting or leasing vehicles, this type of coverage is typically mandatory, while it remains an optional coverage for those who own their vehicles outright.
How soon do you have to get insurance after buying a used car?
You must acquire proof of auto insurance before you can drive a newly-purchased used vehicle off the dealership lot. If you intend to add this used car to your existing insurance policy, it could be covered for up to 30 days, depending on the insurer. Private sellers will not generally request proof of insurance, but you should still take coverage.