Is Minimum Auto Insurance Coverage Worth It?

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  • Most states impose minimum insurance requirements.
  • It is important to buy at least the minimum protection.
  • Most drivers should actually buy more coverage than is required, because auto insurance is vital for financial protection of assets.

Minimum auto insurance coverage is better than nothing, but it's not all a driver needs. 

When buying 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 kinds of coverage as well such as personal injury protection.

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

Is minimum auto insurance coverage worth it?

Although minimum auto insurance coverage offers a pretty limited amount of protection for drivers, it is absolutely worth buying for two key reasons.

First, and most importantly, drivers are typically required by law to have insurance. A motorist without insurance could be found guilty of a misdemeanor criminal offense. This could require going to court and could lead to expensive fines or potentially even jail time in some cases. It is far, far better to purchase minimum auto insurance coverage than to deal with the hassle and consequence of not having it. 

Second, it is better to have some protection than no protection. Minimum coverage usually pays for damages a driver causes to others if the policyholder causes a motor vehicle accident. If a person causes a crash without insurance, victims can still try to get compensation from them. They could sue the drivers personally, which could mean that motorists who don't have insurance see their personal assets potentially at risk. 

If drivers at least have minimum coverage, then insurance could pick up the tab for some of the more minor injuries they cause to other victims.

What should drivers buy instead of minimum auto insurance coverage?

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

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

Drivers should also consider getting some non-required types of auto insurance, including:

  • Collision coverage: A collision policy will provide protection for the policyholder in case of an accident the policyholder causes. With collision insurance, the insurer pays to repair or replace the policyholder's car. Without it, the policyholder must come up with the money out-of-pocket. 
  • Comprehensive coverage: This pays for other kinds of damage to the policyholder that happens in a non-accident situation. Theft, vandalism, and falling trees are just a few examples of the types of damage comprehensive coverage would provide protection against. 
  • Uninsured/underinsured motorist coverage: This provides payment for policyholders who become involved in a collision with a driver who didn't have enough insurance to cover all losses. 

It doesn't cost a whole lot to add these non-required types of insurance onto the minimum coverage -- and it is well worth paying for them for the peace of mind and asset protection they provide. So, consider buying at least minimum coverage plus these add-ons before getting into your car again.

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