What Kind of Car Insurance is Required?

The type of car insurance that you are required to purchase will depend on where you live and what type of system your state operates under. Most states work through a tort system which means that the driver who is liable for the accident will put in a claim to his provider and thus pay for all damages to both his own vehicle and the other drivers in the accident. It is critical that when comparing car insurance, you insure with at least the basic coverage requirements; not only is it against the law not to but it is also dangerous to yourself and the other drivers on the road.

Tort System Insurance Requirements

All states operating under a tort system require their drivers to purchase liability coverage. Most states require bodily injury liability and property damage liability. Bodily injury liability will pay for any medical related costs to the driver while property damage liability pays for any property, including vehicles, buildings, fences, etc. that have been damaged during the accident. There are always limits in place when purchasing these coverage types which are generally around $20,000 per person/$40,000 per accident for bodily injury and $10,000 for property damage; however, your state may have much lower or higher requirement limits.

Uninsured motorist coverage is also normally required for drivers in tort system states. Even if the law doesn’t require uninsured motorist coverage it is a good thing to purchase for your own safety and security. Uninsured motorist coverage will pay for any extra damage to your car or yourself if the other driver is liable but is not adequately covered. What this means is that you are still protected even if the other driver is not. Most states require their drivers to purchase $20,000 per person up to $40,000 per accident of uninsured motorist coverage and many will require both uninsured bodily injury and uninsured property liability.

No Fault System Insurance Requirements

There are nine states that operate under a no fault system rather than the tort system and three that allow their drivers to choose whether they insure under a no fault or tort system. In a no fault system if there is a car accident both drivers will make a claim to their own insurance provider regardless of who is found at fault for the accident.

Most no fault states require drivers to have some type of medical and property damage protection. This is either bodily injury protection or personal injury protection (PIP) and property damage protection which will pay for medical related expenses to both the driver and the passengers. Some PIP plans offer compensation for loss of income, funeral and burial costs as well as medical related expenses. Be sure to review each policy to see what is included. The minimum requirements are usually similar to tort system requirements.

Basic coverage is by no means comprehensive which is by most drivers will opt for additional coverage extras known as ‘full coverage.’ Basic coverage may be adequate for occasional drivers or for drivers that need to insure an older vehicle but most drivers will look into a little more protection both on and off the road. This may include collision, comprehensive, road side assistance and loss of use coverage.

Every state is different when it comes to car insurance requirements. Be sure to review your state’s particular requirements for car insurance when comparing your car insurance online. In most states driving without insurance is grounds for a license suspension and a fine so don’t risk your financial future or your driving history by hitting the roads without adequate insurance.

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