Only three states do not require motorists to have liability insurance: Florida, New Hampshire and Wisconsin, though Wisconsin will begin requiring liability insurance in mid-2010. States which do not have mandatory insurance coverage require vehicle owners to prove they have assets sufficient to cover costs of any accident they cause. If assets are insufficient, the motorist will be required to get insurance.
Liability Is One Element of a Car Insurance Policy
Liability insurance covers accident costs of the at-fault driver. It pays to have the other person’s car repaired or replaced. It also pays for medical expenses of anyone injured in the accident, reimburses for wage loss, and usually provides compensation for pain and suffering.
Florida has the lowest liability limits: 10/20/10. The first number represents the maximum amount available to compensate one person in an accident. The second number is the maximum amount available if two or more people are injured in the accident. The third number is the maximum amount available to repair the other motorist’s car. Most of the states require minimum limits of 25/50/10, though Maine and Alaska limits are 50/100/25. Read also: How to Get the Best European Car Breakdown Cover.
The Insurance Information Institute recommends higher limits, such as 100/300 due to the high costs of accidents. Some states allow accident victims to go after the vehicle owner’s personal assets if car insurance coverage is insufficient.
Other Car Insurance Coverage That Is Required
Some states require motorists to carry personal injury protection and un- or under-insured motorists coverage in addition to liability insurance. Personal Injury Protection, also known as PIP, pays medical expenses for the driver and his injured passengers regardless of fault.
If the accident was caused by someone else, the driver’s insurance company will seek reimbursement for expenses from the at-fault driver’s car insurance company. PIP also covers wage loss if the injured person is unable to work as well as paying for someone to do household chores, such as cleaning and lawn mowing. Med-pay is a watered down version of PIP and covers medical expenses only.
A few states require vehicle owners to have UM/UIM coverage in case the at-fault driver does not have sufficient insurance to fully compensate innocent accident victims. The amount of this coverage is usually the same as the motorist’s liability coverage. Read also: Buying a No Deposit Car Insurance Policy.
Compare Car Insurance Quotes
Vehicle owners preparing to buy car insurance should get several quotes from insurance companies. Quotes vary greatly among car insurance companies; some companies may require motorists to have higher policy limits than what the state requires. All companies will consider the vehicle and the motorist’s driving record when giving car insurance quotes.
Motorists who chose to go without car insurance in states which require coverage are violating state law, and may be fined, sentenced to jail or have their driver’s license suspended. Car insurance can be expensive, but smart motorists consider it cheap compared to paying for an accident out-of-pocket.