Why You Need More than the Minimums

Sean Patterson

A recent study by Next Generation Insurance Group concluded that 61% of 18-29 year olds have been in or had a friend involved in an auto accident during the last two years. You may think that as a young driver you are invincible to car accidents and injury. Sure, seat belts and air bags are a major improvement in accident safety preparedness, but they don't always prevent serious injury or death.

Unlike health insurance, auto insurance is not optional. If you have an automobile, you must satisfy the state requirements for insurance coverage. Nearly all states require minimum Bodily Injury Liability and Property Damage Coverage. This coverage provides benefits to pay claims against the policyholder if he or she is found legally responsible for causing the accident. In most states, required minimum bodily injury liability and property damage coverage is the same for cars and motorcycles. Information on state minimum insurance requirements can be found here: http://www.carinsurance.com/state.

There are two key areas to consider with regard to state minimums. Firstly, personal injury protection covers your medical expenses - and generally covers medical and lost wages incurred to the driver and passengers of a car UP TO YOUR POLICY LIMITS. It can also cover funeral costs. Generally, most young adults should consider increased limits to avoid potential out of pocket expenses related to their injuries and costs of recovery. Secondly, GradGuard highly recommends that you consider Liability coverage that is higher than your state's minimum. Liability coverage includes bodily injury and property damage to others. Why is it important to carry coverage that is higher than your state's minimum? State minimums may not cover all the damage you cause to another vehicle or another person. For instance, let's say that you're in an accident with a driver who has an expensive car or with a car much smaller than yours. There is a very good chance that your property damage expenses will be quite high due to the amount of money it will cost to repair the expensive vehicle or the money it will cost to entirely replace the smaller vehicle. On top of those expenses, you also have to consider any medical costs generated by the other person or persons in your accident. Without coverage higher than the state minimums, you'll have to pay for all of those costs out of your own pocket.