The Surprising Truth About Minimum Coverage Car Insurance

Make sure to read this before buying auto insurance. 

When buying auto insurance, drivers have to decide how much coverage they want. One option available is to purchase minimum coverage car insurance. This would mean buying only the insurance that the state requires.

While it can be cheaper to stick with minimum coverage car insurance only, the reality is that this could be a big mistake. Here's the truth about what a minimum coverage policy would mean for motorists. 

The problem with minimum coverage insurance

While it may seem reasonable to assume the state would require enough coverage to provide sufficient protection from losses, this is not actually the case. In most places, the minimum required coverage does very little to provide meaningful protection for the driver's assets.

Most states require only liability insurance. This is coverage that would pay for the damages sustained by other people who the policyholder hurts. Bodily injury liability would pay for medical bills and injury-related costs if the policyholder caused a car crash that hurt others. And property damage liability would pay for property the policyholder damaged that belonged to other people. 

If a policyholder wants any of their own losses paid for, they would need other protections like collision coverage and comprehensive coverage. 

Some states require personal injury protection (PIP), which would pay for the policyholder's own medical bills and partial lost wages no matter who was actually at fault for the collision occurring. But, only a minority of states mandate this, and it still wouldn't help the policyholder pay to repair or replace their vehicle if they were involved in an accident. 

Not only would minimum coverage leave a driver paying out-of-pocket to fix their car or buy a new one, but it also usually falls short of protecting their assets if they hurt others. The minimum liability coverage required could be very low and injuries regularly result in more costs. A driver could find himself being forced to pay out of pocket for additional costs that crash victims experience that exceed policy limits. 

How much insurance should drivers buy? 

Drivers should not opt for just the minimum coverage, but instead should make sure they get a sufficient amount of insurance so their assets are not at risk.

For most motorists, this means buying collision coverage to pay for damage to their own car if they cause a crash while driving it. Comprehensive coverage, which pays for things like theft or hail or fire damage, should also be added onto policies for most people. And, if liability limits are low -- as they usually are -- drivers should opt for higher policy limits. 

For example, in a state that requires $25,000 per person and $50,000 per accident in bodily injury liability, a policyholder might instead want to opt for a policy that pays $100,000 per person and $300,000 per accident or more. 

Ultimately, it doesn't cost that much more to buy full coverage auto than to buy minimum required coverage -- and it's well worth the extra asset protection that a more comprehensive auto insurance policy can provide.