Pitfalls of 'State Minimum Cover'

You have seen the comercials, you have heard the radio ads, and you have grown to love (or hate) the various spokes-characters. The tout the same thing- keeping you legal on the road for less. This may be the best option for some but if you are driving around with state minimum coverage, you are likely leaving yourself liable for a lot of headaches- physically and financially.

In Ohio, the state minimums are as follows:

In Ohio the required minimum for Bodily Injury Liability Coverage is currently $25,000 per person injured in any one accident and $50,000 for all persons injured in any one accident. The required minimum for Property Damage Liability Coverage is $25,000 for injury to or destruction of property of others in any one accident.

To find your own state’s minimum coverages, call a local agent or do a quick online search: {State} minimum auto insurance. If you are considering bare minimum car insurance, here are the needed facts you should know:

When bare minimum makes sense

If you are recovering from a recent bankruptcy, a college student, on a very tight budget living pay check to paycheck, or have little to no assets, then state minimum car insurance may be the only option that fits your budget.  This will allow you to stay legal on the road. However, if this is your situation, consider the following:      

  • Don’t get complacent. As your financial situation changes and hopefully improves, reconsider your auto insurance and see if you can afford to raise your limits.
  • Avoid risky situations. You cannot predict the unpredictable but you can still do your best to high risk situations.

You could be on the hook for a huge bill

If you’re involved in a wreck that injure another party, you insurance may kick in but with minimum coverage, you may exhaust your limits. For example a moderate to severe accident will likely reach costs off $100,000 or more. This would far surpass the Ohio state minimum limits of 25/50/25.

As the at-fault party, you may have to pay the costly fees of defending yourself and even liquefy your assets like your home or car until the debt is fully paid. This would also include the potential of having your wages garnished. It depends on your budget and lifestyle to determine is saving $10-$20 a month is worth the risk of losing so much.

Increase your limits without raising your bill

Insurance companies value mature and experienced drivers with a good driving record. If you fall into this category, finding better coverage may not cost you much more. If you still need to find lower rates, consider asking your agent if you can raise your deductible- out of pocket expenses- instead of lowering your limits. This is the perks of dealing with a local, trusted agent.

Full coverage doesn’t always protect you

Some people will elect to buy comprehensive and collision coverage in addition to the state minimum thinking that this will be enough. We’ll break this one down for you via bullet points.

  • Comprehensive covers losses from theft, flood, or fire, not collisions.
  • Collision coverage covers you in the event of colliding with another auto or object.
  • Liability coverage needs to be enough to protect your assets.    

If you cause an accident and injure the other party, it will be your liability coverage that will be need to pay out the damages.

Better policies offer more perks

When you buy state minimum auto insurance, you are getting exactly that. However, if you elect to purchase a policy that offers better coverage and costs more, the insurance provider will likely offer incentives to lower your bill. Here are a few of the perks that are currently out there:

  • Free roadside assistance
  • Good grades discount
  • Safe driving discount
  • Free or discounted rental car
  • Cheaper home or other insurance when bundling 

These options can provide more value and a better bang for your buck than a state minimum policy.

If this information was insightful or terrifying (because you currently carry state minimum car insurance), then give us a call! We’ll gladly review your policy at no cost.

 

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