Do I Need More Auto Insurance than the Required State Minimum?

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Do I Need More Auto Insurance than the Required State Minimum?

Do I Need More Auto Insurance than the Required State Minimum?

A driver’s license is a privilege that comes with a considerable amount of obligation and responsibility. The most notable is your potential financial liability if you are found to be at fault for an automobile accident causing injury to a person or damage to property.

Most states have a minimum level of liability insurance that must be purchased, but they do allow insurance companies to offer higher coverage limits. The question many drivers ask is: If the state says that its minimum coverage limits are enough to protect you, why would you need more insurance? It’s important to understand what auto insurance covers in the case of an accident. It’s also important to understand how state minimums might leave you vulnerable and under-insured.

Is State Minimum Auto Insurance Enough?

Let’s take a closer look, using Virginia’s minimum liability coverage limits as an example. They are as follows:

  • $25,000 bodily injury per person, per accident; with a
  • $50,000 bodily injury limit per accident; and
  • $20,000 for property damage per accident.

The bodily injury limit of $25,000 per person and $50,000 per accident can be confusing. The clearest part of the equation is the $50,000, which is the maximum the auto insurance company will pay for medical bills if a person or people are injured in the accident.

The $25,000 per person limit can be confusing. If you hurt one person, the insurance company will pay up to $25,000 to that individual, but no more. If you hurt two people, they can each claim up to $25,000. If you hit more than 2 people, the insurance company will pay the bills for each up to a maximum of $25,000, but the total still can’t be more than $50,000. The more people involved in the accident, the lower your likelihood of having enough insurance to pay their medical bills.

A single major car accident may result in medical bills that far exceed the $25,000 limit. Consider a highway accident that involves emergency evacuation, trauma care, a long hospital stay, and rehabilitation. A limit of $25,000 may not even cover a few days in the hospital, let alone the long-term care the impacted individual might need.

As for property damage, $20,000 per accident may seem like a lot, but consider the cost of vehicles today. If you were to have an accident and damage a luxury car, like a BMW or a Ferrari, you may have enough coverage to make a minor repair. But what if you totaled a luxury car worth tens of thousands? What if your car damaged a house or building? The $20,000 would barely scratch the surface of repairs.

If your auto insurance does not cover all the medical and repair costs of an accident where you are found at fault, the difference will need to come out of your pocket.

What’s the Solution?

Almost every insurance company gives you the option to purchase higher levels of liability insurance, and in many cases the increased cost is fairly nominal. Ask your insurance agent to review your existing auto policy and discuss the options and limits available to you. You should, realistically, purchase the highest level of coverage you can comfortably afford. The more coverage you have, the lower your risk of losing your life savings or assets if you are ever involved in a major accident.


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