Is Your Car Insurance Policy Doing Enough to Protect You?

car insurance policy

Many Americans have shifted what they intend to focus their time and energy on in 2024. Maybe you want to spend more time working out, change careers, or focus on your relationships. Another good New Year’s resolution? Making sure you don’t skip out on reviewing your car insurance policy

Make financial protection a priority throughout 2024 by contacting your insurance agent to go over the details of your car insurance policy. Alternatively, you can obtain a copy of your policy’s declarations page, which contains everything you need to know about your current coverage. Remember—taking stock of your auto insurance policy on a regular basis ensures that you know exactly what’s covered if you’re ever in a car accident.

Does Every State Require Car Insurance?

In the United States, having car insurance to operate a motor vehicle legally is required by law in every state except New Hampshire and Virginia. Per New Hampshire’s Financial Responsibility Law, you only need to prove that you can pay for damages if you are found responsible for causing a wreck. Conversely, Virginia law makes it possible for local motorists to legally avoid obtaining any liability auto insurance by paying the state’s $500 uninsured motorist fee.

Exactly how much coverage you need to have, however, may vary from state to state. The types of insurance coverage required and/or offered by each state also differs.

For example, while almost all states require a minimum amount of bodily injury liability insurance, some states—such as Illinois or New York—also require a minimum amount of uninsured/underinsured motorist coverage. Learn more about different mandatory and optional auto insurance coverages below.

Liability Coverage

Most states are considered at-fault states, meaning that the insurance company of the driver who causes the accident is responsible (or liable) for paying for the injured parties’ losses. Liability insurance thus covers expenses to other drivers and passengers resulting from an accident in which you are determined to be at fault. States that utilize fault-based car insurance include:

  • Illinois
  • Indiana
  • Iowa
  • Louisiana
  • Maine
  • Maryland
  • Mississippi
  • Missouri
  • Montana
  • Nebraska
  • Nevada
  • New Hampshire
  • New Mexico
  • North Carolina
  • Ohio
  • Oklahoma
  • Oregon
  • Rhode Island
  • South Carolina
  • South Dakota

There are two kinds of mandatory liability insurance, called bodily injury liability and property damage liability. Bodily injury covers medical care for the people hurt in an accident, while property damage liability applies to vehicles and other property that may have been damaged.

For those living in a no-fault state, each driver’s insurance company compensates their own policyholder, regardless of who was at fault for the accident. States who utilize no-fault auto insurance policies include:

  • Florida
  • Hawaii
  • Kansas
  • Kentucky*
  • Massachusetts
  • Michigan
  • Minnesota
  • New Jersey
  • New York
  • North Dakota
  • Pennsylvania*
  • Utah

*These states are “choice no-fault” states, as policyholders can choose between fault or no-fault insurance upon enrollment.

Personal Injury Protection (PIP)

Personal injury protection (PIP) coverage is another type of insurance that can protect you in case of injury or damage resulting from an accident. PIP coverage is required in no-fault states, and optional in some at-fault states.

Even if you already have health insurance and live in an at-fault state, PIP can help you pay for medical expenses and copays that are not covered by your insurance benefits. It can also cover medical treatment for any passengers who were in your car at the time of the accident, regardless of who was at fault.

Medical Payments (MedPay)

Unfortunately, not all states offer PIP coverage. However, many states do offer Medical Payments (also called MedPay) coverage, which is inexpensive and offers some additional peace of mind if you’re injured in a wreck. 

Like PIP, MedPay covers the medical expenses of you and any of your passengers in an accident, regardless of fault. Although coverage is less substantial than PIP, it pays out immediately after an accident, with no copays or deductibles. MedPay is available in every state with the exception of Minnesota, New York, North Dakota, and Oregon.

Uninsured/Underinsured Motorist Coverage

Liability protects you if you cause an accident. But what if you are injured by an uninsured motorist? Uninsured/underinsured motorist coverage can help you pay for medical bills and property damage if the at-fault driver does not have enough insurance coverage (or any insurance at all). This can really come in handy if a serious injury claim exceeds the at-fault driver’s policy limits. At least 20 states require uninsured motorist coverage, and 14 also require underinsured motorist coverage.

Collision Coverage

Optional collision coverage protects your vehicle if it is damaged as a result of a collision with another vehicle, a stationary object, or if someone hits your parked car, regardless of whether you were at fault for the collision. Collision coverage may also be helpful if you are ever in a hit-and-run accident.

Comprehensive Coverage

For those who want extra peace of mind, optional comprehensive coverage covers almost any type of damage to your vehicle under the sun. This means if your vehicle is vandalized, stolen, or otherwise damaged by bad weather or natural disasters, you should be covered. Be sure to read your policy for full coverage details and possible exclusions.

auto insurance policy

What Are Car Insurance Policy Limits?

Motorists are required to have minimum policies for coverages like bodily injury liability, property damage, and in some cases, PIP and uninsured motorist protection. All types of car insurance coverage will have what’s called a policy limit. Once you’ve maxed out this limit, you will not receive any additional reimbursement or settlements from the insurance company.  

  • In the U.S., minimum liability coverage for bodily injury liability per person ranges from about $15,000 to $50,000 per person. The most common minimum policy is $25,000 per person.
  • Minimum liability coverage for bodily injury liability per accident ranges from $30,000 per accident to $100,000 per accident. The most common minimum policy is $50,000 per accident.
  • Minimum liability coverage for property damage per accident ranges from $5,000 to $25,000. The most common minimum policy is $25,000 per accident.

It is important to pay attention to coverage limits when it comes to optional coverage as well, since they often increase your monthly premium and sometimes require higher deductibles. Always read the fine print about your coverage amounts and deductible requirements to make sure you’re making the right financial decision for you.

How Much Car Insurance Do I Actually Need?

While it might be tempting to go with the lowest possible car insurance policy limits in order to save money on your monthly premium, this may cost you financially in the long run if you are ever in a car accident that results in significant property damage, life-altering catastrophic injuries, or death.

Investing in higher coverage limits—although they may increase your monthly premium—can help you protect yourself and your assets should the damage from an accident exceed minimum coverage amounts. 

For example, the minimum amount of property damage liability you must carry in New Mexico is just $10,000. But if you caused an accident in which multiple vehicles (including your own) were totaled, your $10,000 in coverage will be exhausted very quickly, leaving you open to being personally sued. 

To ensure your financial protection, MarketWatch provides an example of a 100/300/100 auto insurance policy. This level of liability covers up to $100,000 per person, up to $300,000 per accident, and property damage of up to $100,000. If you own a home, it also might be worth considering an umbrella policy that will protect your car and home and offer better discounts.

What to Do If You’re in an Accident in 2024

If you’ve been injured in a car, truck, or motorcycle accident through no fault of your own, you could be entitled to significant compensation for your medical bills, lost wages, pain, suffering, and additional damages. Unfortunately, insurance companies don’t always offer injured victims the settlement they deserve. 

To schedule a free, no obligation consultation with an experienced personal injury lawyer, contact Lerner and Rowe Injury Attorneys today. We have attorneys licensed in 21 states across the country who can help you maximize your accident claim.

Reach us by phone 24/7 at 844-977-1900, use our convenient LiveChat feature to speak to a representative, or request your complimentary case evaluation by filling out this simple form. Remember, one call is all you need to get the compensation that you’re entitled to. A call to Lerner and Rowe may be the most important one you’ll ever make.

The information on this blog is for general information purposes only. Nothing herein should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.