WEDNESDAY, FEBRUARY 26, 2020
 A common misconception surrounding auto insurance: If you have the legal minimum, you're covered.
This couldn't be further from the truth. If you have the legal minimum, whoever you might run into is covered, but you are not.
The only type of car insurance that you are required to carry is liability. This ensures that, should you be held responsible in an accident, your insurer will be able to pay for the damages.
Your legal minimum policy does absolutely nothing for you if:
- Your car is stolen
- Your car is totaled
- You have medical expenses to cover following an accident
- Your car requires major repairs
So, if you keep the legal minimum coverage and you lose your car to an accident or theft, your insurance provider won’t make you whole. Your insurer won't cover the cost of repairing or replacing your vehicle. If you are injured, and the other party's insurance isn't covering you, then you're going to have to pay out of pocket.
Thus, legal minimum coverage is rarely feasible.
A “bare-bones” policy, in insurance parlance, a policy that includes not only the legally-required liability, but also comprehensive and collision coverage. These are both optional protections by law. But they’re necessary if you want any real protection on the road.
More importantly, the legal minimum of liability protection won't cover you all the way, either. In most states the minimum covers up to $30,000 in bodily injury, and $25,000 for property per accident.
This means if you total someone else's car worth $30,000, you need to come up with that last $5,000 yourself.
The legal minimum is there to make sure that expenses can be covered, to some extent, no matter the at-fault driver's income.
The recommended minimum is typically structured at 100/300/50. Here's what that means:
- $100,000 in bodily injury coverage per person per accident
- $300,000 per accident for total injury coverage
- $50,000 per accident for property damage
With comprehensive and collision, feel free to buy whatever level of protection you're comfortable with. Liability is the big concern. So, the more protection you have the better.
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