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Minimum Auto Insurance Coverage

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What is the Minimum Required Coverage?

How much do you really have to pay for auto insurance? That's something you might quite reasonably be wondering about. You see commercials all over the place, on television, in magazines, and even in your Facebook feed, promising to help you get cheap car insurance, and suggesting that you go with the bare minimum. But should you?

Certainly, any car insurance is better than none at all. But if you go with the bare minimum, you might not have anywhere near enough protection if you should be involved in an accident, because many damages in auto accidents dramatically surpass the routine limits.

Minimum auto insurance coverage varies a bit from state to state. Rather than go through each state individually, we're just going to say here that most states are similar to New York State, where the minimum required coverage is $25,000 per person for bodily injuries, $50,000 per accident for bodily injuries, and $10,000 for damage to property. Your insurance agent, or your state's department of insurance, can advise you in more detail as to state-by-state requirements.

What Do I Need to Know?

If you're considering just carrying basic car insurance coverage, you might want to reconsider. Often, basic coverage simply doesn't cut it.

You could be held responsible financially above and beyond what you're carrying on your minimum limit if you're at fault in a car accident. In fact, it's a virtual certainty that you'll have to pay damages. Even a moderate motor vehicle accident can easily result in costs of over $100,000, and this is well beyond policies with the minimum 25/50/10 coverage.

If your insurance company refuses to come good for what you owe, the injured party can sue you. You'll have to pay for the cost of your defense, and you could be compelled to liquidate your assets, including your bank accounts, your home, your cars, and other possessions in order to satisfy your debt. If you have no assets, your wages could be garnished.

Additional Coverage Might Not Cost All That Much

If you have a minimum auto insurance coverage, you really should consider upgrading. It doesn't cost all that much more. In fact, much of the time you can get double the coverage for even less than ten dollars a month than what you're paying right now for car insurance.

Full Coverage Might Not Even Be Enough

Often, people think that if they have collision insurance, comprehensive insurance, and the state minimum for liability, that's all they need. The reality is that the minimum liability insurance might not be enough to protect your assets. If other people are hurt in an accident, and you're found to be at fault, you may need more liability insurance in order to be able to pay out the damages. So if you skimp, you could be looking at huge, and even ruinous, out of pocket expenses.

Pay the Extra

All it takes is one little mistake, one moment of inattention, one bad reaction in traffic, and the consequences can be horrendous. And realistically, none of us are perfect. Who hasn't looked away for just a second, or not seen that kid who just jumped out into traffic without looking before crossing the street? When accidents happen, fault is apportioned, and if you're deemed to be even partly at fault, the financial consequences could be significant. For the sake of a few extra dollars a month, you're well advised to carry as much liability insurance as you reasonably can, because the state minimums simply aren't enough to protect you.