Insurance experts are calling on policyholders to review their minimum liability coverage to ensure that they comply with their specific state requirements. Of the 50 states, only two have yet to require mandatory auto insurance, Wisconsin and New Hampshire. Insurance analysts say that with Wisconsin set to require motorists to have insurance by next year, New Hampshire is set to follow soon.
All state insurance laws provide for a minimum amount of coverage that policyholders have to comply with. These amounts vary from state to state but the purpose is generally the same – to protect motorists against any financial obligations in the event of an accident. Some states, experts say, require bigger amounts than others because of different factors such as crime rates, accident statistics, and other reasons.
However, all states require a certain amount of liability coverage for car owners. Not having the said minimum liability coverage can lead to hefty fines, additional points on driving records, and even jail time. Analysts, though, say that the greatest consequence drivers have to deal with is the lack of protection or assurance for their financial well-being. They point out that not having the proper protection can lead to loss of personal assets in the event of a car accident. The problem can only get worse if the policyholder is held at fault for the accident.
The first liability coverage is known as the bodily injury liability. This provides for a certain amount of money for every person hurt in an accident. The coverage also provides for any deaths or fatalities as a result of the accident. Typically, most states have a minimum liability amount of $10,000. Another liability coverage deals with the property damage as a result of an accident. The usual amount most states require is often lower that the value of the bodily injury liability coverage.
Experts point out that insurers often place a cap on how much policyholders can get in case of an accident. For example, many insurance providers shell out a maximum of $20,000 for each person injured or killed in an accident. In some states, however, the amounts are much higher. The results of the investigation can also affect the maximum amounts that insurers are willing to pay out. If a policyholder is considered at fault in a car accident, providers can opt to give out substantially less money. Car owners may also have to shoulder some of the repair costs if they cause an accident that has resulted in property damage.