Every U.S. state, with one exception, requires drivers to carry a minimum level of auto insurance to legally operate a vehicle.
Liability coverage is designed to protect other people and their property when the insured driver is at fault in an accident. Specifically, it includes two main components:
These limits are typically expressed as a set of numbers, such as 25/50/25. This format means $25,000 per person for injury, up to $50,000 per accident for injury to all persons, and $25,000 for property damage.
In Minnesota, the minimum bodily injury liability is $30,000 per person and $60,000 per accident, with property damage liability at $10,000.
States mandate these minimum coverage levels to ensure that victims of accidents have some source of compensation and that drivers assume financial responsibility, preventing others from having to absorb the cost of the damages.
Meeting the legal minimum protects one legally, but often fails to provide adequate financial protection or ensure a smooth auto insurance experience. Insurance experts frequently recommend consumers consider higher limits or additional coverage for several common financial and risk management reasons:
When a vehicle is financed or leased
When financing or leasing a vehicle, the lender or lessor usually requires the driver to maintain not only liability coverage but also full coverage, which includes collision and comprehensive insurance, to protect their investment. Furthermore, if a driver causes an accident and the costs for repairs or negligence exceed their liability limits, the lender or other parties could pursue them for the difference. Choosing only minimum limits frequently leaves a driver underinsured.
When other valuable assets are owned
For individuals who own assets such as a home, savings, investments, or other personal property, a lawsuit resulting from a serious car accident could easily exceed minimum liability limits. This exposure creates a significant risk to personal assets. Opting for a higher liability limit helps shield and protect those valuable possessions.
When protection from uninsured or underinsured drivers is desired
Many states’ minimum liability coverages do not include, or only minimally include, uninsured or underinsured motorist (UM/UIM) coverage. This coverage is essential because it protects the insured if another person causes a crash and does not carry enough insurance to cover the damages. Adding higher limits or optional coverages significantly increases the margin of financial safety.
When repair and replacement costs are high
Modern vehicles often cost substantially more to repair than the property damage liability minimums established in many states. Similarly, medical costs continue to rise. Minimum limits may not adequately cover a multi-vehicle accident or a more serious injury, leaving the driver responsible for substantial out-of-pocket expenses.
Always check a state’s required minimum. For the most accurate and current data, one can consult state Departments of Insurance or regulatory guides, such as those from the National Association of Insurance Commissioners (NAIC).
Determining adequate coverage
The legal minimum liability coverage is the baseline. CheapInsurance.com recommends evaluating assets, vehicle value, and risk exposure to determine if coverage should exceed the minimum.
If a vehicle is financed or leased, or if significant assets exist (home, savings, investments), it is wise to consider coverage well above the state minimum.
When shopping for the next car insurance policy or comparing quotes, do not simply stop at “meets the minimum.” Explore liability limits, optional coverages, uninsured or underinsured motorist protection, and whether the policy covers more than the basics
Note: Always confirm with your state’s current regulatory source or your insurance agent, as limits may change.
Note: Always confirm with your state’s current regulatory source or your insurance agent, as limits may change.
This story was produced by CheapInsurance.com and reviewed and distributed by Stacker.