This is the legally required section of any policy. The limits and content changes from state to state but in essence this is the part that protects other road users, vehicle and property owners.
The logic behind it is that the states only allow you to drive on public roads if you have a policy to compensate third parties who may suffer injuries and losses due to your actions.
Usually, most people have a standard coverage that includes protection for the automobile owned as well as liabilities. Unless specifically asked for a lesser protection, most companies and agents automatically offer full coverage car insurance.
Not only do they assume this is what you want but also, some of them aren’t keen to insure motorists who just want the minimum enforced.
What Is Included in Minimum Coverage?
It depends on the state you live in. If you don’t live in a no-fault state, it may be as simple as third party auto insurance that covers injuries and property damages up to a certain amount. It may be shown like 25/50/25 which means up to $25,000 per injury, $50,000 per accident and $25,000 per property damage.
In no fault states you would be required to buy Personal Injury Protection which covers you, your family and passengers. This is required in those states because they don’t allow you to claim on other drivers unless there are exceptional circumstances. Your Personal Injury Protection pays for your injuries.
Also, some states may require Uninsured Driver Coverage. As the name suggests this pays your damages in case the driver who caused it has no insurance. You may also buy this even if it isn’t required but it is limited to the coverage levels you have for others. You cannot go above the limits of your basic policy on this.
Who Needs These Basic Policies?
There is a reason why people are looking for basic policies and it is mostly due to financial restraints. When money is tight you cannot do much about it but look for the ways to make it go further. There are many bills and expenses along with maintenance and gas costs.
People know their own circumstances best. Yet, they should make sure they know what they are and they aren’t buying.
Interestingly enough some confused motorists do ask questions like does liability insurance cover my car? It is important to understand that these minimal legally required policies don’t cover your automobile. So, if you have a decent car, it may not be for you since you won’t be compensated if something happens to it.
They are usually for people who have pretty cheap automobiles and therefore can cope with losing it. Also, if there is a loan on it you may have to insure it.
This choice may actually be intentional for high-risk drivers who face elevated premiums because they are young, new to driving, just had a claim or a traffic violation judgement. Then, they just have to have at least a couple of years of clean driving and claim history before they can go and buy a better vehicle and coverage.
Liability vs Full Coverage
Providing you can afford it you should look for more as often full coverage car insurance is a better choice. Also, the price gap between the two may not be as wide as you think. There are more companies offering the latter than the former and that makes the market for the latter more competitive.
And the market for the former may be pretty limited to one or two companies at times and places. This scarcity allows them to name their price and it may be pretty expensive for what you are getting.