Car insurance requirements vary from one state to another. What works for a family member or friend living in another state might not work for you.
Basic terminology with auto insurance
New Hampshire being the sole exception, every other requires a minimum amount of liability insurance. This liability coverage pays for the damage caused to other drivers in an accident, either to his person or his vehicle or both.
The components to car insurance liability coverage are as follows:
Bodily injury coverage per person
Bodily injury coverage per accident
Property damage coverage per accident
An example of a limit would be a series of numbers like 20/25/5. Say you hit a van or bus that has many passengers. In that case, your liability coverage would pay up to $20,000 per person involved but not more than $25000 and also cover $5000 for the damage done to the vehicle.
However, it’s recommended that you carry much more than the minimum liability insurance. The reason being, serious accidents can cost a lot more in medical bills than say a minimum which is $20,000. If the victim sues you, then you are up against a lot more in damages. It’s recommended that you carry a liability insurance of 100/300/50.
Personal injury protection
20% of states require that you have Personal Injury Protection coverage, which is for your own medical expenses as well as the passengers in the accident. PIP additionally, may nor may not cover lost wages due to the accident. It’s often the norm in “no-fault” states where each party covers damages for the accident himself.
Uninsured/Underinsured Motorist Coverage
Nearly 50% of all states require you to have uninsured or underinsured motorist coverage. This coverage helps in all situations for the damages or injuries to passengers when the driver of the other vehicle doesn’t have enough car insurance. In some cases, UIM also covers property damages.
Medical Payments Coverage
Medical payments coverage covers the medical expenses associated with the accident. There are no dual benefits. MPC coverage is just for covering the medical expenses. This coverage is a required policy in Maine and Pennsylvania.
Exceptions to State requirements for coverage policies
We just saw the different minimum liabilities required by each state. However, not every state imposes upon drivers to have insurance. New Hampshire, for example, requires insurance only from those drivers who have been convicted for criminal charges involving vehicles like drunken driving.
There are also alternatives provided by other States:
Proof of Financial Responsibility
In States like Arizona, drivers can provide a certificate of deposit or cash to the department of motor vehicles in lieu of insurance. It can vary from as little as $30,000 to as much as $100,000.
Uninsured Motorist Registration
Virginia on the other hand, lets residents register as uninsured motorists and charges an annual fee for the same. It doesn’t replace insurance. It just lets them drive without an auto insurance.
However, for all purposes, getting an insurance policy is much safer than going for the alternative routes. It will help you in the long term.