Auto Insurance Coverage: What’s the Law in Your State?

Did you know that if you own a car in the U.S. it’s required to have auto insurance that covers property damage and personal injuries in the event of an accident? The extent of the auto insurance coverage depends on which state you live in, however, keep in mind that you’ll need protection and support in the event of financial loss due to a car accident or if your vehicle has been stolen or damaged.

We’ve this guide together in order to help you make the most informed decision on what auto insurance coverage you should select.

What Does Minimum Auto Insurance Coverage Mean?

The minimum coverage, also called "civil liability" coverage for damage to the property of third parties, is the requirement stipulated by law that establishes what must be the minimum protection that your auto insurance covers in the event of an accident where damage occurs to third parties. That is, to other people than you.

It is important to understand this; as by law whoever owns and/or operates a vehicle has the responsibility of having this minimum coverage in place. This ensures that in the event of an accident the driver and/or owner has the means and the commitment to take responsibility for damages caused to third parties.

How To Know Your State’s Requirements

Auto insurance coverage comes in different ranges, from the minimum “civil liability” coverage, to collision coverage and comprehensive coverage. Each state stipulates what the minimum requirement is by local law. Knowing these requirements will help you find low-cost auto insurance.

To find out the minimum coverage for your state:

  1. Access the State Consumer Protection Office directory
  2. Select your state
  3. Click on "Insurance Regulators"
  4. Contact the office and ask for the minimum coverage

What’s The Difference Between Personal Injury And Property Damage?

Let's take the case of the state of Illinois as an example to better understand the difference between bodily injury and property damage. In that state, an auto insurance agent will probably tell you that the minimum coverage is 20/40/15… but what does “20/40/15” mean?
Well, each figure represents the sum covered by the insurance for a specific type of damage:

  • 20: The first figure refers to the limit of damages that the insurance will cover for personal injury expenses per person (in this case it would be $20,000).
  • 40: The second figure refers to the maximum limit of damages that the insurance will cover for expenses of bodily injuries per accident in the event that there is more than one injured (in this case it would be a maximum of $40,000).
  • 15: The third figure refers to the damage limit that the insurance will cover for property damage (in this case it would be $15,000).

So, 20/40/15 means having a coverage of up to $20,000 per person injured in an accident, up to a maximum of $40,000 per accident, and up to $15,000 for property damage.

Tips For Selecting Your Auto Insurance Coverage

  • Make sure to get more than one auto insurance quote in order to compare prices and coverage.
  • If you feel a little unsure, consider working with an independent agent to advise you in the selection process. Start with this directory to find counselors in your state.
  • Research how insurance deductibles work, so you don’t have any nasty surprises down the line. 
  • Ask about auto insurance discounts. You can find discounts for owners who drive less on a yearly basis, for those who have taken a defensive driving course, for those who have not committed infractions or had any car accidents in the previous three years, among others.
  • Look out for better auto insurance coverage prices if your vehicle has anti-theft or other types of security devices installed.
  • Insure more than one vehicle with the same auto insurance company for better prices.

To conclude, experts consider that having only a minimum coverage policy is dicey and they suggest that paying a little more for comprehensive coverage can save you from a great deal of financial and physical risk.

Drive with peace of mind!

The best way to ensure peace of mind when you hop into your car is to know your auto insurance coverage requirements and adhere to them. Remember that the auto insurance providers aren’t just there to sell you their services, but also to provide answers to your questions and ensure you’re complying with the law. If you want a totally unbiased opinion we recommend also reaching out to your local state insurance regulators.

Safety comes first!