Higher Auto Insurance Requirements Can Be a Good Thing

In the past couple of years, a few states have increased the minimum levels of auto insurancethat must be purchased to legally register and drive an automobile.

In 2011, the state of Texas began requiring higher liability policy limits, which made few motorists very happy, since they were looking at a potential rate increase. Any policy that was written or renewed after Jan. 1, 2011 had to have liability coverage with no less than $30,000 for bodily injury to one person, $60,000 for bodily injury per accident, and $25,000 for property damage, or as commonly abbreviated, 30/60/25. This amount is an increase from 25/50/25 that became the mandatory limits in April of 2008.

On Jan. 1, 2010, Wisconsin’s car coverage requirements increased, and motorists were required to purchase auto policies with liability limits of 50/100/15 and would also need 100/300 in uninsured motorist (UM) coverage. Additionally, effective June 1, 2010, Wisconsin began requiring car owners to carry coverage at all times while operating a vehicle in the state.

However, under the provisions of 2011 Wisconsin Act 14, the minimum requirements for coverages were restored to the old levels. Policies that were newly issued on or after Nov. 1, 2011, are required to provide liability coverage of 25/50/10 and UM/UIM of 25/50. Reducing coverages to these levels may reduce premiums, but the amount of savings may not justify choosing to go with less protection.

Increasing Car Insurance Limits in Congested Areas

Liability coverage offers protection to the policyholder and any third party or property that may be injured or damaged during the operation of insured car. For this reason, most states require motorists to have at least property damage liability to be considered financially responsible and drive lawfully. Being required to have this coverage on policies could be a blessing in disguise if an insured were to cause an accident, and they will be glad that protection was there. The bad news is that many states don’t require very high auto insurance limits.

States with heavy traffic areas seem to have some low insurance requirements. Ohio requires motorists to maintain property damage liability in the amount of $7,500, and California only requires $5,000. Both states have heavily utilized roads in certain areas, which means a higher likelihood of a motorist being involved in an accident and multiple cars being involved. Many auto owners are quick to accept the cheapest rate, which is often coupled with the minimum requirement, but there are many situations where $5,000-$7,500 can be eaten up pretty quickly.

When consumers hear the words “property damage liability,” many automatically assume that their car will be covered in an accident and may only envision collisions that involve two autos. If a policyholder causes an accident with multiple vehicles—which doesn’t have to be severe$mdash;and they are found liable for any amount that exceeds the liability limit that they carry, they will often be responsible for paying the amount due. There is also a chance of hitting other types of property such as traffic lights, buildings and homes that can exceed the levels of coverages. Motorists may want tocomplete a car insurance comparison based on more coverage to see if higher levels can be afforded. Industry professionals and consumer guides often recommend limits of 100/300/50.