Is the minimum auto insurance coverage worth it?

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Minimal auto insurance coverage is better than nothing, but that’s not all a driver needs.


Key points

  • Most states have minimum insurance requirements.
  • It is important to buy at least the minimum protection.
  • Most drivers should actually buy more coverage than necessary, as auto insurance is vital for financial asset protection.

When shopping for auto insurance, drivers will likely notice that there is a minimum amount of protection they must purchase. Depending on the state, this could include only liability coverage or it could include other types of coverage as well as personal injury protection.

Minimum auto insurance coverage tends to come with relatively low policy limits and leaves out many optional coverages such as collision and comprehensive coverage. But is it worth buying?

Is the minimum auto insurance coverage worth it?

Although the minimum car insurance coverage offers quite limited protection to drivers, it is absolutely worth buying for two main reasons.

First, and most importantly, drivers are generally required by law to have insurance. A motorist without insurance could be convicted of a criminal offence. This could require legal action and result in costly fines or even jail time in some cases. It is far better to have minimal car insurance than to deal with the hassle and consequences of not having it.

Second, it is better to have some protection than no protection. The minimum coverage generally covers damage that a driver causes to others if the policyholder causes a traffic accident. If a person causes an accident without insurance, the victims can always try to obtain compensation from him. They could sue drivers personally, which could mean motorists who don’t have insurance have their personal property potentially at risk.

If drivers have at least minimal coverage, insurance could cover some of the more minor injuries they cause to other victims.

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What Should Drivers Buy Instead of Minimum Car Insurance Coverage?

Rather than buying only minimal auto insurance coverage, drivers should make a smarter choice. They should buy the minimum and then additional coverage on top of that.

Specifically, many motorists will want to purchase more liability protection than they are legally required to. It’s common for states to charge as little as $25,000 per person, $50,000 per accident, and $5,000 or $10,000 in liability for property damage. Most accidents that cause injury and property damage will result in losses exceeding these amounts, so purchasing a policy with a higher limit is a good idea.

Drivers should also consider purchasing certain types of non-compulsory car insurance, including:

  • Collision coverage: A collision policy will provide protection for the policyholder in the event of an accident caused by the policyholder. With collision insurance, the insurer pays to repair or replace the policyholder’s car. Otherwise, the policyholder has to find the money out of his own pocket.
  • Full coverage: This pays for other types of damage to the insured that occur in a non-accidental situation. Theft, vandalism and falling trees are just a few examples of the types of damage that full coverage would provide protection against.
  • Uninsured/Underinsured Motorist Coverage: This helps pay policyholders who are involved in a collision with a driver who did not have enough insurance to cover all losses.

It’s inexpensive to add these non-required types of insurance to the minimum coverage – and it’s worth paying for them for the peace of mind and asset protection they provide. So, consider buying at least minimal coverage plus these add-ons before you take your car back.

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