Insurance 101: State Minimum Limits

What are state minimum limits? Is it sufficient coverage for my auto insurance? Each state has adopted a minimum standard requirement for auto insurance liability coverages. These are auto insurance coverages that you are required to have by law in order to operate a private passenger vehicle. The coverages are bodily injury and property damage to others. The reason that they are required is to, in the event of an accident where one driver is at-fault, and the other driver is not-at-fault, cover the medical expenses and damaged property of the not-at-fault party involved in the accident.

The state minimum limits vary by state, but each state requires that you carry at least a minimum amount of insurance to protect other drivers. Driving without liability insurance could result in fines, license suspension, or possibly jail time, depending on the state and the court’s ruling. Some states require that you also carry uninsured motorist and/or underinsured motorist coverage in addition to liability insurance. Uninsured motorist and uninsured motorist coverage protects you in the event that you are the not-at-fault party in an accident with a driver who does not have insurance (uninsured) or a driver who doesn’t have enough insurance to cover the cost of your bodily injury or property damage (underinsured.)

Are state minimum limits enough coverage? In most states, the state minimum limit is 25/50/25. That is, $25,000 for bodily injury to one person, $50,000 if multiple people are injured, and $25,000 for property damage. Some states require less than 25/50/25, and some require more. The average cost in the U.S. for hospitalization resulting from an automobile accident for one person is $57,000. If you have the average state minimum limit of $25,000, your insurance company will pay the $25,000 that they are responsible for. The remainder of that person’s medical expenses is your responsibility. Now, suppose that there was a passenger that sustained injuries in the vehicle. You could also be responsible for the passenger’s medical expenses. Now, suppose they were driving a vehicle worth $40,000, and their vehicle is totaled. Since your property damage coverage for others is $25,000, you now owe another $15,000 out of your pocket to replace their vehicle. While the state minimum limits could be enough coverage in some minor accidents, a major accident could end up costing you thousands of dollars out of pocket, or the victim of the accident can sue you, threatening your assets.

It is recommended that you carry far more than most state’s state minimum limits. Below is a list of each state’s requirements for liability insurance. If you have state minimum limits and would like to get a quote for higher limits, speak with your insurance agent about increasing your limits of liability to others, or click here for an insurance quote.