Understanding State Minimum Requirements For Auto Insurance
Saturday, November 17, 2012 Category : Auto Insurance Off
Although car insurance is a recurrent expenditure, it is an important
one since it will protect you against financial liability or loss if
your car is involved in a collision resulting to property or physical
damages. In the united states, auto insurance rules differ among states,
but in most cases, liability insurance is required as a proof of
financial responsibility, or to put it simply, to demonstrate that you,
as the car owner, can cover the cost of damage to other people or
property in the event of an accident where you are at fault.
Some
jurisdictions, such as Wisconsin, have less stringent "proof of
financial responsibility" rules. In the state of Virginia, insurance is
also not required, and people living there can instead pay the state an
annual fee, around $500 per car, if they opt out of buying liability
insurance. By comparison, 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. Because of these variations in insurance
requirements, it is best to check with your state's transportation
bureau.
Understanding required car insurance in USA
When
looking at your state's insurance requirements, you would probably
encounter numbers like 25/50/25. The first two numbers refer to bodily
injury liability limits and the third number refers to the property
damage liability limits. To elucidate, 25/50/25 signifies each person
hurt in a car accident would receive a maximum of $25,000, but only
$50,000 is permitted for each accident. This means, if there are three
individuals hurt, and each of them need $25,000, whoever submits a claim
first gains first access to the $50,000 limit. As for the last number,
it indicates that the total coverage per accident allotted for property
damage is $25,000.
In the event of an accident, these state
required limits often could not adequately cover all of your liability
and property damage requirements. As such, even though purchasing a
policy that satisfies your state's minimum requirements is all that is
required to operate a vehicle legally in your state or avoid being
penalized for not showing proof of financial responsibility 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 expenses for you, and
the possibility of jail time or being sued if you cannot pay for your
liabilities.
How much insurance should you buy?
Insurance
agents may tell you that you should purchase as much as you can pay for.
While that may seem rational, it is not necessarily practical. For
instance, you don't have to shell out a lot of money on a personal
injury protection policy if you already have a health insurance or
disability insurance through your employer.