Auto Insurance Groups: State-By-State Requirements Explained

Nearly all states in the US have minimum requirements for liability coverage, but there are also other types of car insurance that may be required depending on the state. While some states only require liability insurance, others might require extra medical coverage or personal injury protection (PIP), which covers healthcare bills for the driver and their passengers. Uninsured and underinsured motorist insurance is also mandatory in about half of all states.

Liability insurance

Bodily injury liability coverage helps pay for bodily injuries for which you are legally liable. This means that your actions caused injury to another person and you were found legally responsible for those injuries. It can also help cover defence and court costs if you are sued.

Property damage liability coverage helps pay for damage to another person's property, such as repairs to the other driver's vehicle, a rental vehicle while the other person's car is being repaired, damage to buildings, fences, or other structures, and damage to personal property. It can also cover legal fees if you're sued for property damage.

The cost of liability insurance depends on several factors, including the amount of coverage selected. For example, higher coverage limits may cost more. It's important to note that liability insurance does not cover damages to your own property or injuries to yourself, which would be covered under separate insurance options.

Uninsured/underinsured motorist coverage

Uninsured motorist coverage specifically applies when the other driver has no auto insurance, while underinsured motorist coverage applies when the other driver doesn't have enough insurance to cover the damages or injuries they caused. In both cases, uninsured/underinsured motorist coverage can help pay for medical bills for both the policyholder and their passengers, as well as repairs to the policyholder's vehicle and other property. This coverage is especially important because nearly 13% of drivers countrywide don't have auto insurance, and in some states, this number exceeds 20%.

Depending on the state, uninsured/underinsured motorist coverage may be separate or combined, and it can consist of up to four coverages:

• Uninsured motorist bodily injury (UMBI): Covers medical bills for both the policyholder and their passengers.
• Uninsured motorist property damage (UMPD): Covers damage to the policyholder's vehicle and other property.
• Underinsured motorist bodily injury (UIMBI): Covers medical bills when the other driver doesn't have sufficient insurance.
• Underinsured motorist property damage (UIMPD): Covers vehicle repairs when the other driver's insurance isn't enough.

It's worth noting that some states may require a deductible for UMPD/UIMPD, but UMBI/UIMBI generally doesn't include a deductible. Additionally, uninsured motorist coverage can also provide protection in hit-and-run accidents, although in some states, UMPD will not cover these incidents.

While not all states mandate uninsured/underinsured motorist coverage, about half of them require at least one of these coverages, and it's an important option to consider for anyone purchasing car insurance.

Personal injury protection

PIP covers the medical expenses of both the policyholder and their passengers, regardless of whether they have health insurance. It also covers medical expenses for insured drivers and their passengers if they are hit by a car while walking or riding a bike. In addition, PIP can cover lost wages, household services such as childcare and house cleaning, disability and rehabilitation costs, and funeral expenses. In some states, PIP includes a deductible, with a range of deductible amounts to choose from.

The number of states that either require or offer PIP as an optional add-on is increasing. This is because PIP provides valuable protection, ensuring that medical care is affordable following a car accident. PIP also often provides payments for lost income, childcare, and funeral expenses related to the accident.

However, it is important to note that PIP does not cover property damage. Additionally, in no-fault states, drivers are still required to carry bodily injury liability coverage to pay for injuries that exceed the state's threshold for bodily injury lawsuits.

Medical payments coverage

MedPay covers expenses such as hospital visits, nursing services, ambulance and EMT fees, health insurance deductibles and co-pays, surgery, X-rays, and dental procedures. It can also cover prostheses or other medical mobility devices, and ongoing medical services. However, it does not cover costs that go beyond your auto policy's stated limit, childcare expenses while you recover, wage reimbursement if you're unable to work due to your injuries, medical costs for injuries to other drivers involved in an accident, or any medical treatments that aren't related to the auto accident.

MedPay limits typically range from $1,000 to $10,000, depending on the state and insurer. It is generally recommended to carry coverage equal to your health insurance deductible so that you can use MedPay to cover your out-of-pocket medical expenses. If you don't have health insurance, consider carrying a higher MedPay limit to help pay your medical bills after an accident.

Comprehensive and collision coverage

While car insurance is mandatory in almost every state in the US, collision and comprehensive coverage are not required by state law in any state. However, these optional coverages are an important form of protection for your vehicle. Collision coverage insures your vehicle in the event of a collision with another vehicle or object, regardless of who is at fault. Comprehensive coverage, on the other hand, covers non-collision damage to your vehicle, such as theft, vandalism, fire, hail, or animal damage. Both types of coverage are typically required if you have a car loan or lease.

When selecting comprehensive and collision coverage, you can choose your deductible, usually between $100 and $2,000, depending on your budget and risk tolerance. It's worth noting that the higher the deductible, the lower your insurance premium will be. The coverage limits for these policies are determined by the value of your vehicle and the deductible amount selected. In the event your vehicle is totalled, the maximum payout is typically the actual cash value of your vehicle, minus the deductible.

While comprehensive and collision coverage are optional, they are an integral part of a robust auto insurance policy, ensuring you have the necessary funds to repair or replace your vehicle in the event of an accident or unexpected incident.

Frequently asked questions