Reader’s Question:

My friends are talking about minimum auto insurance coverage and how they differ from state to state. What is this minimum coverage and how do they affect us as soon-to-be car owners?

Barney

Fairless Hills PA

In most states in the U.S., driving on public roads and highways without an auto insurance policy at hand is punishable by law. It can also cause the suspension of your driving license or your driving privilege. The government wants to protect its constituents by requiring you to purchase an auto insurance so that you have the means to pay for the damages and injuries that you can cause to other people and their properties in case of a road accident. Thus, each state’s Department of Insurance sets the minimum auto insurance coverage required for car owners to have, which differs from state to state.

Auto insurance companies basically offers the state’s mandated minimum auto insurance coverage, which comprises third party liabilities coverage. This coverage will pay for the liabilities that you have to other people to pay for damages and injuries you caused them in the accident. The industry of auto insurance normally state a liability insurance coverage in three numbers, which represent the maximum amount covered for each individual injured in an accident, the maximum total amount covered for bodily injuries at one accident and the maximum amount covered for property damages.

For example, in Maryland, the minimum auto insurance coverage required by the state is 20/40/10 for liabilities insurance. This means that for any accident, your insurance policy must be able to pay a maximum of $20,000 per individual for bodily injuries, $40,000 for total bodily injuries in the accident and $10,000 for damages done to the other party’s properties or vehicle. Similarly, for Colorado, the minimum coverage should be 25/50/15, representing a maximum of $25,000 for bodily injuries per person, $50,000 for total bodily injuries and $15,000 for property damages. Other samples are Alaska at 50/100/25, Massachusetts at 20/40/5 and California at 15/30/5.

Take note, however, that there are a handful of states that do not require a minimum amount of auto insurance coverage such as Wisconsin, South Carolina, New Hampshire, Virginia and Tennessee.