Why You Should Avoid Bare Minimum Auto Insurance Coverage

Why You Should Avoid Bare Minimum Auto Insurance Coverage

Some drivers feel that they only need to meet the minimum requirements when it comes to their auto insurance. For this reason, they do just what they have to do to drive legally without thinking about the consequences of being underinsured.

State Minimums

Each state has its own guidelines regarding the minimum requirements for auto insurance. Also, it isn't mandatory in all states, either. Technically speaking, you only need to carry the bare minimum auto insurance coverage for the state you live in. While you may feel that this can save you money over the years, you will also find it can cost you money in the event of an accident.

Bodily Injury Liability

When you get into an accident, bodily injury liability is what pays for the injuries you may have caused to the other driver and passengers. State minimum auto insurance has a maximum payout that can be granted to each person with a total payout amount for each accident.

Property Damage Liability

The damage and repair costs associated with the accident are covered by property damage liability coverage. However, it only covers the other vehicle, not your own. To cover your own vehicle, you should have collision insurance.

Uninsured and Underinsured Motorist Coverage

Almost half of the states require that policyholders carry some type of uninsured motorist coverage. This kind of coverage protects you in the event of an accident involving a driver who doesn't have insurance or doesn't have enough insurance. Some states require this kind of coverage in their policies. The limits often match the liability limits within your auto insurance policy.

Personal Injury Protection

Also known as PIP, this insurance coverage covers your injuries as well as the injuries of your passengers during a collision, regardless of who is at fault. Only approximately 20 percent of states currently require this kind of coverage.

Determining Your Insurance Coverage

So, how much coverage do you need? You need to factor in your location, age, the kind of vehicle you drive, your marital status, driving history, as well as your gender because all of this can affect the rate the insurance company gives you.

You also want to make sure you have enough coverage to adequately protect yourself and your assets without having to contend with exorbitantly high monthly premium payments.

  • Liability: add up the total value of your assets and income and find a proportional policy amount


  • Comprehensive and Collision: these coverage limits depend on the age of the vehicle, your mileage, and the overall value of your car


  • PIP: if this is mandatory in the state you reside, you may find that the minimum requirements may be more than enough in this case


  • Uninsured and Underinsured: when determining how much coverage you need in this category; consider how much driving you do and where you live. This kind of coverage can become costly, and almost 60 percent of states don't even require their drivers to carry this coverage

If you have more questions on state minimums and how to ensure you have an adequate amount of auto insurance in your state, then contact the experts at Panorama to discuss your options.

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