One very important thing that drivers need to do is learn what their states require of them. In most cases, this is bodily injury and property damage liability insurance coverage, and the states set minimum requirements for this type of coverage. For example, one state may require that drivers have at least $25,000 to cover the medical bills for one injured person in case they cause a collision. They will also need to have an amount of money that will cover at least two people hurt in the crash, and most states double the previously listed amount. In this example, drivers would need at least $50,000 for two or more people hurt in the collision.

Most states also require that drivers purchase property damage liability coverage because at-fault drivers will be charged with paying to repair all property that was damaged in the crash. The states set a minimum requirement for this type of coverage as well, and this amount may be $5,000 in one state, but it could also be $25,000 in another.

Where to Go to Learn the States’ Minimum Requirements

Drivers can contact their states’ Department of Insurance to determine what the minimum requirements are before they seek to purchase liability coverage. Because this insurance is mandatory, auto insurance companies must sell the state’s minimum requirements in every one of their insurance packages. Therefore, if drivers are purchasing their auto insurance from a company or an agency that is licensed to sell insurance in their states, they will have the required liability coverage once they are approved to purchase a policy.

When to Increase Liability Limits

In most cases, the minimum requirements are very low, and this amount may not be enough to cover all of a driver’s risks. For example, if a driver causes a collision and several people are injured, they can sue the at-fault driver if they discover that he or she has significant assets. In this case, drivers with a great deal of money and assets will need much more liability insurance than the states require. Most financial advisors suggest that people in this situation have at least $100,000 to cover one person’s injuries, at least $300,000 for everyone injured in the crash and at least $100,000 for damaged property.

The Umbrella Policy

For some people, the increased amounts listed above are still not enough because they have millions of dollars in net worth that they would like to protect from future lawsuits. They can increase their liability coverage even more by purchasing an umbrella policy that can add millions of dollars to the liability coverage they currently have for their homes and their automobiles.

Optional Insurance Coverage

Auto insurance companies also sell optional auto insurance coverage. It’s not required by the states, but those who have new vehicles may find it necessary unless they can afford to replace their cars on their own if their vehicles are totaled or stolen. If this will not be possible, a wise purchase would be collision coverage.

In the event that a driver causes a collision, the property damage liability will only pay to repair or replace third-party vehicles. If the at-fault driver purchases collision coverage, his or her car can be repaired no matter who caused the collision.

If you need affordable auto insurance, visit shop-carinsurance.net to receive free quotes from the top auto insurance companies in the country.

Credit:  joshua m. neff