Is Minimum State Insurance Requirements Enough?

October 2015
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Almost all states require that a driver must have insurance. And almost each state has different coverages that a driver must purchase to be able to drive in that state. But even though most states have a minimum requirement, that doesn’t mean all minimums are sufficient to properly insure someone. Most insurance companies, insurance agents, and even the insurance information institution recommend having limits set at 100,000/300,000.

What do your limits of insurance mean?

So you bought an auto insurance policy and you were told the limits you had are 25/50/25, now what does that even mean for you? A good majority of the American population doesn’t even understand what these limits mean. With more and more drivers buying insurance online and forsaking going through an agent this could mean a lot of drivers are potentially under insured for lack of insurance knowledge.

Lets take the first number of 25/50/25.

The 25 here is a limit for bodily injury liability. This is the most the insurance will pay out for any one individual involved in the accident.

The 50 is also a bodily injury liability limit. This is the limit for the amount the insurance company will pay out in any one accident you are involved in.

The last 25 refers to property damage. This is the limit of property damage liability per vehicle in an accident.

So for example, if you were involved in a auto accident that injured three people in the vehicle, the insurance company would pay up to $25,000 per person, but the insurance company would not exceed $50,000 in total for the accident.

California Minimum Insurance Requirements

In the state of California you are required to have limits of at least 15/30/5.

This means that in an accident the insurance company will pay no more than $30,000 in total for an accident. This is actually very low considering that auto accidents can exceed this amount very easily. This is especially true when more than one person is involved in the accident. And the amount that exceeds the insurance company’s limit you will be liable for.

But this isn’t to say that everyone should have the same high limits. Depending on your situation your insurance agent will be able to recommend what would be best for you. Just because the state has a minimum doesn’t mean you should be have your limits set to such. So, talk to your agent and get informed, so you and your family are properly protected.

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