What Type of Car Insurance Is Required by Law?
Understanding insurance mandatory minimums
By Andra DelMonico, J.D. | Reviewed by Canaan Suitt, J.D. | Last updated on April 24, 2024 Featuring practical insights from contributing attorney Mark W. TannerUse these links to jump to different sections:
- What Is Liability Car Insurance?
- What Does Liability Insurance Cover?
- Do All States Require Liability Car Insurance by Law?
- Why Do States Set Mandatory Minimums for Auto Insurance Coverage?
- What Are the Mandatory Minimums?
- Do I Need Coverage Beyond the Mandatory Minimum?
- Finding Experienced Legal Help
Paying for an insurance policy is just one of those necessary parts of driving. No one loves shopping around and comparing rates from different insurance companies. However, like health insurance, car insurance is one of the must-haves in life. The first step is knowing what you are legally required to purchase. Then, you can consider your situation and if you should buy additional coverage.
What Is Liability Car Insurance?
Liability coverage provides payment when you cause damage to someone else’s vehicle or property in a car accident. This insurance protects your personal assets and financial stability by providing financial compensation for the loss the other person experienced.
Liability insurance provides injury coverage by compensating for medical expenses. It can provide coverage for injury-related expenses, and cover damage. Medical payment coverage is crucial because these expenses can become significant.
What Does Liability Insurance Cover?
Liability insurance will cover the range of losses experienced in a car accident. The different types of liability insurance will provide coverage for the different types of claims insurance companies typically receive. The most common types of coverage include:
- Bodily injury liability
- Personal injury protection
- Property damage liability
- Collision damage
Your state of residence defines the minimum amount of coverage you can buy. However, you can buy more coverage than the minimum limits. The more coverage you want in your policy, the more expensive your insurance premiums will be. You can offset this cost by requesting a higher deductible. This is the money you pay out of pocket before the insurance kicks in.
The final cost of liability insurance will depend on a variety of factors. The more of a liability the insurance company deems you, the more expensive your insurance coverage will be. Factors like your driving record, ticket history, accident history, cost of previous insurance payouts, and living location all factor into your insurance cost.
Do All States Require Liability Car Insurance by Law?
All states except New Hampshire require you to have a certain amount of car insurance. All of these states have mandatory minimums that you must meet when buying a car insurance policy. Having enough insurance ensures injured parties can get compensation for their injuries and losses. This helps make them whole when they are victims of someone else’s negligence or reckless behavior.
Insurance laws are designed to protect state residents. They protect drivers from losing their entire life savings and owned assets if they make a mistake and cause an accident. They also protect victims by giving them a viable resource for seeking recovery. State laws vary with minimum coverage amounts because state accident trends define these. This could include the average value of the vehicles owned, the average cost of vehicle repair, and average medical treatment costs. In states where these costs are higher, the state laws require higher minimums.
Why Do States Set Mandatory Minimums for Auto Insurance Coverage?
Mandatory insurance minimums help states protect their citizens by ensuring they have recourse when they get into an auto accident. As part of getting a license and registering a vehicle in your state, you are required to learn the car insurance requirements. When you contact an insurance company, they will ask your state of residence. They will use this as a guide for purchasing your car insurance policy. Car insurance companies will not let you buy a policy less than the state-required minimum.
“Everybody who owns a vehicle that is registered in Pennsylvania is required to have insurance,” says Mark Tanner, a personal injury attorney in Philadelphia who represents injured accident victims. “There is a mandatory minimum of both liability coverage and also first-party medical coverage. If you are in an accident, your own carrier will cover your medical expenses up to the limit of insurance you have purchased.”
If you decide to drive a motor vehicle without buying an auto insurance policy, you risk hefty fines or having your driver’s license suspended. Some states may also pull your vehicle’s registration or require jail time.
What Are the Mandatory Minimums?
Each state has laws that define the minimum liability limits drivers must maintain. When you buy car insurance, the insurance company gives you insurance quotes for a policy with the minimum amount and then provides options for you to add additional coverage beyond the minimum requirements. This is typically the collision coverage or comprehensive coverage. You do not have to buy the optional coverage.
Almost all states require you to buy at least bodily injury and property damage liability insurance. New Hampshire is the only state that does not legally require drivers to buy car insurance. Drivers who purchase insurance in New Hampshire must get a policy that includes at least $25,000 in bodily injury coverage per person, $50,000 in bodily injury coverage for an accident involving multiple people, and $25,000 in property damage coverage. The policy must also include at least $1,000 in medical payments coverage to pay your medical bills in an accident.
Virginia used not to require it, but this has changed. Virginia’s legislative body passed SB 951 in 2023 to go into effect in 2024. This bill eliminated the DMV program that allowed drivers to pay $500 annually and avoid buying car insurance. It also defined state minimums for coverage that go into effect in 2025.
1. Bodily Injury Liability
One type of mandatory insurance coverage is bodily injury liability. This covers the injury costs of the other parties when you are liable for an accident. The coverage can compensate for medical bills, injury-related expenses, and legal fees. It will not cover your medical costs or those of your passengers. If you were not an at-fault party, then you would make a claim against the at-fault driver’s injury coverage.
When looking at state-required minimums, you will see two values for bodily injury liability coverage. One number defines the maximum coverage for a single accident, and the other defines the maximum coverage for each individual. Generally, the individual maximum is half of the total accident maximum coverage.
The majority of states have a required:
- Total accident coverage value between $30,000 and $60,000. There are a few outliers, Alaska and Maine requiring $100,000.
- Minimum coverage for individual maximum payouts between $15,000 and $30,000. Alaska and Maine require $50,000.
Florida does not specifically require bodily injury insurance because it requires PIP insurance, which includes bodily injury coverage. Florida’s requirements are $20,000 and $10,000. Florida is not the only state that requires drivers to purchase PIP. Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, and Utah all require it.
2. Property Damage Liability
To cover the physical damage from an accident, you will purchase property damage liability coverage. This coverage pays to repair the other party’s vehicle when you are the at-fault driver. It can also cover the repairs to physical property, such as a wall, fence, or another structure. It typically does not cover the damage to your vehicle. Collision coverage would provide this. If the other party is the at-fault driver, then their property damage liability coverage will pay for your vehicle’s damage.
The majority of states have property damage minimum requirements between $10,000 and $25,000.
3. Personal Injury Protection (PIP)
Some states take a no-fault approach to insurance liability. In these states, coverage and claims work differently. Drivers are required to purchase personal injury protection (PIP) insurance. It provides comprehensive coverage for medical costs, injury-related expenses, funeral costs, loss of income, and more. The claims and coverage process works slightly differently. Each driver makes a claim under their own personal injury protection policy coverage.
4. Uninsured and Underinsured Motorist Coverage
While it may or may not be required, many drivers add uninsured or underinsured motorist coverage to their car insurance policy.
- Uninsured motorist coverage will give you coverage when the other driver involved in the accident does not have car insurance. These states require drivers to have uninsured motorist coverage as a part of their policy: Connecticut, DC, Illinois, Kentucky, Main, Maryland, Minnesota, Montana, Nebraska, New Jersey, New York, North Carolina, North Dakota, Oregon, South Carolina, South Dakota, Vermont, Virginia, West Virginia, and Wisconsin. Some states allow you to choose a different amount for this coverage, while others require this coverage to be identical to your bodily and property coverage.
- Underinsured motorist coverage will provide additional coverage when the other driver’s insurance policy has maximums that are less than the total amount of damages. These states require drivers to have underinsured motorist (UIM) coverage as a part of their policy: Connecticut, Illinois, Kentucky, Main, Maryland, Minnesota, Nebraska, New Jersey, New York, North Carolina, North Dakota, Oregon, South Carolina, South Dakota, Vermont, Virginia, and West Virginia.
Uninsured motorist coverage also covers your damages when involved in a hit-and-run accident. Without this coverage, you are left to pay for the repairs out of pocket. Tanner explains the benefits of having uninsured driver insurance even if the state doesn’t require it: “If you have uninsured motorist coverage, once you report the accident to the police, you can recover directly against your carrier, irrespective of whether the striking driver is ever identified.”
5. Physical Damage or Collision
This coverage typically only covers the damage done to your vehicle. However, coverage can vary based on how the damage was done. You will want to review your policy to determine what is covered and if you need to buy additional coverage for what you need. For example, hitting an animal can be a more significant risk in some parts of the country than others. Vandalism and earthquakes may also be a bigger risk in some areas. Because of the increased risk, insurance companies may require you to buy special additional coverage. These are common reasons to buy additional collision coverage:
- Vandalism
- Falling objects
- Rollovers
- Collisions with another vehicle
- Fire
- Hitting an animal
- Earthquakes
6. First-Party Medical Expenses
First-party medical expense coverage may not be required but is potentially beneficial. It will cover your (the policyholder) and your passengers’ medical expenses. The injuries must be reasonable and sustained in the car accident. Typically, this coverage will apply regardless of fault.
Do I Need Coverage Beyond the Mandatory Minimum?
Regardless of your state minimum requirements, you should consider buying liability insurance that fully protects you. Without liability insurance, you are personally responsible for any injuries or damages caused in an auto accident. You will also have to pay for your own defense attorney should you get into an accident and get sued.
Buying the minimum liability insurance is often not enough to fully cover injury and property damages. The excess amount will come from your personal savings or assets. This could wipe out your entire life savings. Tanner explains that drivers may want to buy more than the state minimum. “Pennsylvania state required minimums for health insurance are outdated. They haven’t kept up with current values or with inflation, and the minimal coverage seldom protects people to the extent necessary,” he says.
Some states allow you to forego car insurance if you do not want it. However, you will need to provide proof of financial responsibility. Many states require you to have a bond, cash, securities, or self-insurance or pay an uninsured motorist fee.
Finding Experienced Legal Help
While having the minimum state-required automobile insurance is helpful, it may not fully protect you in the event of an auto accident. Purchasing the minimum will keep your insurance costs lower but could cost you much more in the long run. Since you never know when an accident might happen, protect yourself and everything you have worked hard for by having the right amount of car insurance.
Visit the Super Lawyers directory to find an experienced car accident lawyer. For more information on these legal issues, see our overview of motor vehicle accident law and determining fault.
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