Medical payments (MedPay) or personal injury protection (PIP) cover the costs of injuries to the driver and any passengers in your vehicle, in contrast to bodily injury liability coverage. It may also cover lost wages as a result of injuries sustained in an accident in some instances.
Table of Contents Personal Financing Car Ownership Car Insurance How Much Do You Need?
By CHUCK TANNERT Updated August 7, 2022 Reviewed by ERIC ESTEVEZ Fact checked by AMANDA JACKSON How much car insurance do you require?
Your state may require a certain amount of coverage, but it is not always sufficient. The answer is contingent on a number of variables, including where you live, the value of your vehicle, and the other assets you need to safeguard. What you need to know is as follows:
Important takeaways The majority of states require you to have at least the minimum amount of insurance coverage in case you cause an accident and suffer injuries or damage to property.
In the event of an accident, damage to your own vehicle is covered by optional collision insurance.
Other dangers, like fire and theft, can be mitigated with comprehensive coverage, which is an additional option.
If you’re hit by someone who doesn’t have insurance, you can protect yourself with uninsured motorist coverage, which is required by some states.
1 How Automobile Insurance Works An automobile insurance policy is actually a collection of various insurance policies. The most typical are:
Medical payments or protection for personal injuries Collision coverage Comprehensive coverage Uninsured/underinsured motorist coverage Depending on the state in which you live, some of these coverages may be required and others may be optional. Your auto loan or lease provider may have additional requirements. However, you may want to purchase additional insurance to safeguard yourself beyond what your state or lender require. How to figure out how much coverage you really need and a closer look at each type can be found here.
Liability for bodily harm What it covers: The part of a car insurance policy that will pay for injuries you or family members listed on your policy cause to another person in an auto accident is called bodily injury liability.
How much is required: Drivers are required to purchase bodily injury liability coverage in virtually every state, though the amount required varies from state to state. Your liability coverage is typically expressed as a series of three numbers, like 25/50/20, on an auto insurance policy. In this example, the first number represents the maximum amount your insurer will pay per person if you cause an accident—$25,000. In the event that more than one person sustains injuries, the second number represents the maximum amount it will pay out per accident—$50,000 in this instance. Liability for damage to property is the topic of the third number.
You will need to purchase at least the minimum amount of bodily injury coverage required by your state. That amounts to $25,000 for each individual and $50,000 for each accident in many states, though some have lower or higher rates.
However, if you are involved in a serious accident, the minimum requirements set forth by your state may not be sufficient. In the event of a lawsuit, you’ll need to think about your assets and whether they would be adequately protected. For instance, if you own your house or have a lot of money saved, a costly accident could put those things in danger. If that’s the case, you should buy more insurance. In case of emergency, the non-profit Consumers’ Checkbook, among others, advises purchasing coverage of at least 100/300/50. The cost of that coverage and your state’s minimum coverage probably won’t be much different.
2 If you have more assets to safeguard, you can purchase even more coverage than that, such as 250, 500, or 100. You also have the option of purchasing an umbrella policy, which will increase the liability coverage for both your home and auto insurance to at least $1 million.
Liability for Property Damages What it covers: When you or members of your family cause damage to another person’s vehicle or other property in an accident, such as a tree or fence, property damage liability covers the costs.
How much is required: Property damage insurance is a requirement in nearly every state, just like bodily injury insurance. It is the third number in that sequence on your policy, so a 25/50/20 policy would cover $20,000 in expenses. Property damage liability coverage can be as little as $10,000 or $5,000 in some states, but the most common minimums are $20,000 or $25,000.
1 Once more, you might want to buy more insurance than your state requires. However, unless you collide with a Rolls-Royce or Lamborghini, you probably don’t have to worry as much about your finances as you would in a serious accident. A common recommendation for property damage coverage is $50,000, or even more, if you need to protect a lot of your assets.
Personal Injury Protection (PIP) or Medical Payments (MedPay) What it covers: Medical payments (MedPay) or personal injury protection (PIP) cover the costs of injuries to the driver and any passengers in your vehicle, in contrast to bodily injury liability coverage. It may also cover lost wages as a result of injuries sustained in an accident in some instances.
How much is required: Your state will determine whether medical payments or PIP coverage is required, optional, or even available. PIP coverage is required in states with no-fault insurance laws, such as New York and Florida. For instance, drivers are required to carry at least $10,000 in Florida.
The minimum amount in New York is $50,000.
You may not need to purchase more PIP coverage than the minimum required by law if you and your family members already have good health insurance. However, if you do not have health insurance, you might want to buy more.
This is especially true in a state like Florida, where $10,000 in coverage might not be enough in the event of a serious accident.
