Understanding State Minimum Requirements For Auto Insurance
Even though auto insurance is a recurring expense, it is a necessary expense one because it will cushion against financial liability or loss if your car is involved in an accident resulting to property or physical damages. In the US, car insurance regulations vary among states, but in most cases, liability insurance is required as an evidence of financial responsibility, or to put it simply, to demonstrate that you, as the car owner, can cover the expenses arising from the damage to other people or property in the event of an accident where you are at fault. Some jurisdictions, like Wisconsin, have less stringent “proof of financial responsibility” rules. In the state of Virginia, insurance is also not required, and residents can instead pay the state a yearly fee, about $500 per vehicle, if they opt out of buying liability insurance. In contrast, there are a few states such as North Carolina where it is mandatory for you to buy liability insurance prior to the issuance of a driver's license. Due to these differences in insurance requirements, it is best to check with your state’s transportation bureau. Understanding state requirements of car insurance in USA When looking at your state’s auto insurance requirements, you would most likely encounter numbers like 25/50/25. The first two numbers are bodily injury liability limits and the third number is the property damage liability limits. For instance, 25/50/25 would mean that each person injured in an accident would get a maximum of $25,000, but only $50,000 is permitted per accident. This means, if there are three people hurt, and every one of them require $25,000, whoever submits a claim first gets first access to the $50,000 limit. When it comes to last number, it means that the total coverage for each accident allotted for property damage is $25,000. Car Insurance
In case of an accident, these state required limits usually could not sufficiently cover your entire liability and property damage requirements. As such, even though buying a policy that satisfies your stateâ€™s minimum requirements is all that is required to operate a vehicle legally in your state or save yourself from receiving punitive action in the event of an accident, this is not always the best choice. This is because doing so would translate to more out-of-the-pocket expenditures for you, and the potential for jail time or being sued if you cannot pay for your liabilities.
How much insurance should you buy? Insurance providers might convince you that you should purchase as much as you can afford. While that might seem logical, it is not always practical. For example, you do not need to shell out a great deal of money on a personal injury protection policy if you already have a health insurance or disability insurance via your employer.
Even though car insurance is a recurring expense, it is an important one since it will protect you against financial liability or loss if yo...