Auto Insurance Minimums: State Requirements

Nearly every state in the US has a minimum requirement for car insurance, which is usually liability coverage. The exact amount of coverage required varies by state, with some states requiring more coverage than others. For example, Washington state requires a minimum of $25,000 for injuries or death to another person, $50,000 for injuries or death to all other people, and $10,000 for damage to another person's property. On the other hand, Maine and New Hampshire require medical payments coverage, which operates like Personal Injury Protection (PIP) coverage.

Liability insurance

The minimum amount of liability insurance required varies from state to state and is usually expressed as a series of numbers, such as 15/30/10. For example, in the case of 15/30/10 coverage, your insurance would pay up to $15,000 per person for bodily injuries, with a total limit of $30,000 in bodily injury costs for the incident, and $10,000 in property damage coverage.

While liability insurance is a necessary component of car insurance, it is recommended to carry more than the minimum amount of coverage. This is because, in the event of a major accident, the minimum coverage may not be sufficient to cover all the expenses. Experts typically suggest liability coverage of 100/300/50 for a "full coverage" policy. Additionally, an umbrella policy may be worth considering for extra protection if you have a high net worth and a lot of assets.

Uninsured/underinsured motorist coverage

• Car repairs and replacement of property in your car.
• A rental car if needed.
• Medical bills for you and your passengers.
• Lost wages if you can't work due to the accident.
• Pain and suffering costs.
• Diminished value of your car after the accident.

The deductible for uninsured/underinsured coverage is generally lower than that of collision coverage. For example, it is $250 in Texas. You can usually add more coverage in increments of $5,000, and it is recommended to add enough property damage coverage to replace your vehicle.

When purchasing auto insurance, insurance companies must offer uninsured motorist coverage, and you have to reject it in writing if you don't want it. If your state requires uninsured motorist coverage, you must buy at least the state's minimum, which is typically an amount that matches your liability coverage.

Uninsured motorist coverage is especially important if you live in a state with a high rate of uninsured drivers, such as Mississippi, which has the highest rate at 29.4%. Even in states with lower rates, such as New Jersey, which has the lowest rate at 3.1%, it is still a risk to drive without uninsured motorist coverage.

Personal injury protection (PIP)

PIP covers the policyholder, their passengers, pedestrians, and in some cases, other drivers, regardless of whether they have health insurance. It typically covers medical expenses, lost wages, rehabilitation costs, replacement services (such as childcare and house cleaning), and funeral expenses.

PIP is required in some states as part of "no-fault auto insurance" laws, which restrict the ability to sue for car crash injuries. Currently, PIP is required in 15 states: Delaware, Florida, Hawaii, Kansas, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Oregon, Pennsylvania, and Utah. In Washington state, PIP is optional.

The minimum and maximum coverage limits for PIP vary by state. For example, in Delaware, the minimum PIP coverage required is $15,000 per person and $30,000 per accident, while in Hawaii, the minimum required coverage is $10,000 per person.

Even in states where PIP is not required, it can still be a valuable addition to an auto insurance policy, especially if your health insurance plan does not adequately cover car accident injuries.

Medical payments coverage

MedPay is especially useful for those with high health insurance deductibles or no health insurance at all. It can help cover your out-of-pocket costs, such as your deductible, and give you peace of mind in the event of a car accident. If you are unsure whether you can afford to pay medical bills for yourself and your passengers after a car accident, MedPay is a good option to consider.

It is important to note that MedPay is not offered in every state. In states that do not offer MedPay, personal injury protection (PIP) coverage is usually available instead. PIP is typically required in no-fault states, where drivers must use their own insurance to cover any injuries after an accident, regardless of who is at fault. PIP also covers lost wages, while MedPay does not.

When deciding on the amount of MedPay coverage to purchase, consider the amount your health insurance will pay for accident-related expenses. If it seems insufficient, MedPay can help fill the gap. Additionally, keep in mind that the coverage amount you choose will affect your MedPay premium, with higher coverage resulting in a higher cost.

Bodily injury liability

The liability limits on your insurance policy will typically show three numbers, such as "$100,000/$300,000". The first figure is the maximum limit of coverage for one injured person, while the second figure is the coverage limit for two or more persons in any one accident or occurrence. The third number represents the amount your insurer will pay to repair another person's vehicle or other property per at-fault accident.

For example, let's say you have a policy with bodily injury insurance limits of $100,000/$300,000 and you cause an accident that results in the following expenses for injuries to the three people in the other car:

• Michael: $90,000
• Anne: $70,000
• Chris: $120,000

In this case, your insurance will cover all of Michael and Anne's expenses because they fall under the per-person limit of $100,000. However, you will have to pay the remaining $20,000 for Chris's medical costs out of pocket since the total expenses exceed the per-person limit. As for the per-accident limit, your policy will cover up to $300,000, but you are still responsible for paying any expenses that exceed the per-person limit.

Most states have a minimum bodily injury liability coverage requirement. For example, Alabama requires a minimum of $25,000 per person and $50,000 per accident, while Alaska requires $50,000 per person and $100,000 per accident. It is important to review your state's specific requirements and consider purchasing additional coverage if needed.

While bodily injury liability coverage is crucial, it is just one component of a comprehensive car insurance policy. Other types of coverage to consider include property damage liability, personal injury protection, uninsured/underinsured motorist coverage, and medical payments coverage.

Frequently asked questions