Why Would Drivers Want More Car Insurance Than They're Required to Have?

Is it a good idea for motorists to buy more than the minimum coverage?

Depending where they live, most motorists are required to buy liability insurance for their cars. The amount of coverage they're mandated to purchase also varies by location, but one common requirement is to purchase coverage equaling $25,000 per person, $50,000 per accident, and $10,000 for property damage. Often, this is the only type of auto insurance they are mandated to buy.

While most states require only a limited amount of insurance, many motorists opt to buy more than the minimum needed -- perhaps opting to purchase $250,000 in coverage per person and $500,000 per accident in bodily injury liability coverage. And many motorists also choose to buy different types of auto insurance that may not be mandated, such as collision coverage, comprehensive coverage, and uninsured motorist coverage.

Obviously, buying more protection means paying higher premiums. But, it can actually be really smart to pay more for extra protection. Here's why drivers may need to get more coverage than their state requires.

The minimum amount of auto insurance could leave drivers with far less protection than they need

There's a simple reason why it's often the best financial choice for drivers to buy more insurance than they're required to. In fact, it may be smart to buy a lot more coverage, as the required insurance actually provides very little protection for a driver's assets.

If a motorist buys the minimum amount of coverage, it is likely that any type of serious accident would result in more losses than insurance would pay for. Liability insurance covers damage the policyholder causes to others. If the driver causes a major accident and injures several people -- especially severely -- crash victims could pursue a claim for damages far in excess of what an insurer would pay. The motorist could be left paying extra costs out-of-pocket.

That's not the only situation where tremendous losses could occur if a person had only minimum coverage. If a driver buys only liability insurance, the policy would pay only for damages incurred by others. But many other things can go wrong. A car could crash, for example, or be damaged by hail. Or an accident could happen that's caused by someone else who has too little insurance to pay for losses.

Drivers can help protect themselves with additional coverage

If a driver wants protection from these other potential sources of tremendous loss, it’s necessary to purchase additional coverage that's usually not required. This could include collision coverage that pays to repair or replace the policyholder’s vehicle when they’re at fault, comprehensive coverage that pays for theft or non-accident-related damages, and uninsured or underinsured motorist that pays for damages caused by a motorist who causes a crash but who has inadequate coverage.

Ultimately, every motorist should consider the potential for loss that could occur if they buy only the minimum coverage, and think seriously about purchasing more than those mandated minimums so they have the full protection they need.