State law requires drivers to purchase certain types of auto insurance, while drivers have the option to purchase additional coverage if they choose. adding more coverage will result in higher premiums, but it also provides more risk protection. You need to understand the required types of coverage so you don’t break the law by not getting them. In addition, you should be aware of the optional coverage types in case they are useful in your situation.
The main type of mandatory auto insurance is known as liability coverage. This will apply when someone is injured or your property is damaged in an accident caused by you. you will almost certainly need to purchase this coverage, except in some states where a driver can show that he can pay for damages from an accident out of his own pocket. Liability insurance is divided into categories for property damage and bodily injury. Property damage insurance most often applies to vehicles, but can also apply to buildings, real estate, or personal property that is damaged in an accident. Bodily injury insurance can apply to injuries sustained by a driver or passenger of a vehicle, but it can also apply to other potential victims, such as pedestrians.
Each state imposes a certain threshold that a liability insurance policy must meet. For property damage, this can be anywhere from $5,000 to $25,000, depending on the state. for injuries, different thresholds may apply for each accident and for each victim injured in an accident. In general, a driver should expect to purchase at least $15,000 in bodily injury liability insurance per victim, and he may need to purchase up to $50,000. If your state requires additional types of policies, different limits may apply.
Buying the minimum amount of insurance may not be a smart move, especially if you have significant assets. If you are at fault in a serious accident, the victim could sue you in a personal injury lawsuit for damages beyond the coverage provided in your policy. personal liability could create a substantial loss of your resources. You may want to consider paying higher premiums for a broader scope of coverage to reduce the risk of this situation.
potentially mandatory coverage
Some states require coverage for accidents involving uninsured or underinsured motorists. This type of policy protects someone who is injured in an accident caused by a driver who did not obtain the required liability insurance, or whose liability insurance does not fully cover the costs of the accident. A victim can sue the at-fault driver directly in these situations, but usually will not have enough personal assets to pay a judgment. Uninsured and underinsured motorist coverage fills this gap by providing coverage beyond the at-fault driver’s policy limits. you can buy it for both property damage and bodily injury. Even if your state doesn’t require it, uninsured or underinsured motorist coverage is often a good idea.
In an effort to reduce disputes after accidents and pay bills more efficiently, certain states have mandated no-fault auto insurance. This is often referred to as Personal Injury Protection (PIP) insurance. It must cover victims’ medical bills, regardless of who was at fault, and some PIP policies may cover other expenses as well. If your state doesn’t require PIP coverage, you can still purchase it.
Collision coverage can be viewed as a property damage version of pip coverage. The insurer will pay for costs related to vehicle damage in an accident, regardless of who was at fault. it can apply even to accidents where your car was the only vehicle involved.
meanwhile, comprehensive coverage applies to any type of damage or loss that does not result from an accident. Perhaps your car was stolen or vandalized, or perhaps severe weather caused damage to a car that was parked outside. People in some rural areas may consider comprehensive coverage because it often applies to damage caused by hitting an animal with a car.