About Minimum Liability Car Insurance

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Basic auto insurance. Liability-only. State minimum coverage. Bare bones car insurance. It may go by different names, but minimum auto insurance generally does one thing: Help you stay legal on the road! There are many ways to find cheap auto insurance rates, and minimum auto insurance is one of them. 

However, before you purchase minimum auto insurance, it's critical to understand what coverages you're getting – and more importantly, what coverages you aren't getting. 

Keep reading to learn about the benefits of minimum auto insurance, the differences between liability-only and so-called "full coverage," and whether liability-only coverage could be a good fit for you.

What Is Minimum Liability Car Insurance?

In most states, minimum liability auto insurance coverage is the most basic level of auto insurance you can buy for your vehicle. Every state has its own car insurance laws that mandate the minimum amount of liability insurance required to drive legally in that state. You can often find cheap insurance that will help you meet your state's minimum requirements and keep you legally covered on the road. 

Sticking to liability-only car insurance is one way to keep your insurance costs low, but it's not an option for every driver. For instance, if you're leasing or financing your vehicle, you may be required to carry coverage that goes beyond minimum liability insurance. Also, keep in mind that if you have liability-only coverage and you're at-fault in an accident, or if your car is vandalized or stolen, you'll have to pay for your vehicle to be repaired or replaced. As we explain below, liability insurance coverage doesn't pay for damages to your car. 

What does liability insurance cover?

"Liability car insurance" usually refers to bodily injury liability (BIL) and property damage liability (PDL), which are both included in the liability coverage we offer. This type of insurance helps pay for damages that result from an auto accident you cause, including the other person's medical expenses, property damage, lost wages, etc. Liability insurance coverage offers no protection for your own medical bills or vehicle repairs.  

Again, the amount of required basic liability car insurance varies by state.

Am I required to have more than liability car insurance? 

You might be required to have more than liability coverage depending on where you live, whether your vehicle is financed or leased, or your driving history. Some states also require no-fault insurance (also referred to as personal injury protection or PIP) and/or uninsured motorist insurance coverage as part of the minimum required financial responsibility. Click here to learn more about the requirements in your state.  

  • No-Fault/Personal Injury Protection (PIP) helps pay (within state-specific limits) for certain medical, hospital, and funeral expenses, as well as lost wages, that result from a car accident, regardless of who is at fault. 
  • Uninsured Motorist Coverage helps pay for bodily injury and, in certain states, property damage sustained by you and other passengers in your covered vehicle in an accident. This coverage applies when the at-fault driver does not have auto liability insurance or is a hit-and-run driver. In some states, it also includes coverage for damages caused by at-fault drivers who have insurance, just not enough of it to cover your claim entirely.

Benefits of Minimum Auto Insurance

Having the minimum amount of insurance to stay legal is better than having no insurance at all because, for the most part, driving without auto insurance is illegal. Every state requires drivers to maintain financial responsibility. There are a few ways to secure financial responsibility on a vehicle; an auto insurance policy is one of the easiest methods.

Minimum auto insurance is the least amount of insurance coverage you can have while still meeting your state's mandatory car insurance liability laws. Aside from giving you the amount of coverage you need to comply with your state laws, let's take a closer look at why a driver might choose to only purchase the minimum car insurance required by their state’s law:

1. It can be a good option for older vehicles

Does your car have high mileage or is so old that you probably wouldn't repair it in the event of an accident? Minimum auto insurance doesn't include optional coverages, like comprehensive and collision, that would help pay to repair or replace your car in the event of an accident or other covered damage. If you know you wouldn't replace your car anyway, why pay for more coverage than you need? 

One rule of thumb is that the cost of comprehensive and collision coverage should not exceed 10% of your vehicle's value. (You can determine the value of your car at Edmunds.com or KBB.com.) 

So, if your vehicle is worth $5,000 and you're paying more than $500 a year (10% of $5,000) for comprehensive and collision, it may not make financial sense to purchase these optional coverages. However, before you make that decision, it's wise to talk to your insurance agent about the pros and cons of opting out of these coverages.

2. It can lower the cost of owning a car

With insurance, registration fees, gas, and maintenance, the cost of owning a car can add up quickly. If you're looking for ways to cut back on your overall car expenses, going with minimum auto insurance (as opposed to piling on optional coverages) could help. 

3. It puts you in control of car repairs after an accident

If your car is damaged in an accident or natural disaster, there's a good chance you'll be paying for it to be repaired or replaced. That's because minimum auto insurance doesn't include comprehensive and collision. Sound like a drawback? Maybe not. With minimum auto insurance, you're in control of who repairs your car, when the work is completed, and which repairs are made. You can even do the repairs yourself! 

4. It could be suitable for people who rarely drive

You need car insurance whether you drive five miles a week or 500. However, if your car spends more time in your driveway than it does on the road, you could save money by choosing the minimum amount of car insurance. Generally speaking, that's because the less you drive, the less likely you will be involved in an accident and file a claim.

Liability-Only v. Full Coverage Car Insurance

"Liability-only" and "full coverage" car insurance: these are terms you may have heard tossed around before, but what do they mean, and which level of coverage is best for your needs? 

Keep reading as we bust some of the most common liability-only car insurance myths, answer the most commonly asked questions, and give you the insight you need into these two (often confusing) terms. That way, you can confidently make the best decision for you, your family, and your car! 

The Lowdown on Liability-Only Insurance

Liability-only insurance generally refers to the most basic level of coverage that you can purchase for a vehicle. Although car insurance requirements vary from state to state, liability-only insurance is often the minimum amount of coverage required by law. It is designed to help protect you should you injure another person or cause damage to their property while operating your vehicle.

When you hear someone say "liability-only," they're actually referring to two types of liability coverages that go hand in hand, not one: bodily injury liability and property damage liability. Together, these coverages can help pay for the other person's medical expenses, lost wages, vehicle repair or replacement, and more.

While liability-only coverage will help you meet the legal requirements in most states, it probably won't offer the amount of coverage you would want in the event of an accident. Why? Liability car insurance alone does not provide coverage for your car or your injuries. Without coverage beyond liability-only, you could face hefty repair bills for the vehicle you depend on every day.

The Myth of "Full Coverage" Car Insurance

You won't see "full coverage" listed when it's time to get a quote. Despite what many people may think, there's no such thing! When people refer to "full coverage," they're typically describing a policy that includes these coverages: 

  • State-mandated bodily injury liability insurance 
  • State-mandated property damage liability insurance 
  • Comprehensive coverage 
  • Collision coverage 

Collision and comprehensive are both related to damages that occur to your vehicle. Collision coverage applies if your car hits another object or is hit by a hit-and-run driver. Comprehensive coverage comes into play if your vehicle is stolen or damaged in an event other than a collision, like fire, flooding, or vandalism. 

A policy described as "full coverage" would not cover:

  • Your liability exposure if it is higher than the liability limits you chose 
  • Claims related to an uninsured or underinsured motorist 
  • Your medical expenses 
  • The amount of any deductibles you choose, including for comprehensive and collision coverages 
  • Events that are specifically excluded under your policy 

That hardly seems "full," now does it? At Direct Auto, we've got your back. We pride ourselves on being transparent and straight-up about your coverages and use their real names, so you know exactly what you're getting. 

If you're looking to lower your rates but not your coverage, talk to an agent about changing your deductible. You may be able to save money on your premium by choosing the highest deductible you can afford or by paying more money upfront. 

How Do I Choose the Coverage That's Right For Me? 

There are unique features of each type of coverage we've explored. If you're deciding which could be right for you, it may be helpful to ask yourself these questions: 

How much do I want to pay for car insurance? A liability-only policy with minimum limits tends to be one of the cheapest ways to stay insured and stay legal while out on the road. 

If my vehicle is damaged or totaled, would I have enough money on hand to repair it or replace it? Remember, your own injuries or property damage are not covered with liability-only insurance. 

How old is my car? With older vehicles, there's a chance your insurance premium could end up costing more than the value of your vehicle. While this may tempt some vehicle owners to opt for liability-only, it could be a potentially risky scenario if you aren't sure whether or not you have enough cash on hand to repair or replace your vehicle in the event of an accident. 

Is Minimum Auto Insurance Right For Everyone?

Choosing liability-only insurance with minimum limits makes getting covered really affordable, but is it right for you? There is no one-size-fits-all for car insurance, and the "right" amount of coverage varies by driver and state.

Direct Auto is here to help answer any questions you have about liability car insurance and whether minimum auto insurance makes sense for you. For more information or a free, no-obligation quote, call 1-877-GO-DIRECT (1-877-463-4732) or visit a Direct location near you.

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