8 Reasons Why Minimum Coverage Auto Insurance Is Not Enough

Every expert will advise you that only buying minimum levels of car insurance coverage is not enough coverage, and there is more than just one reason why this is so. Read on to find out why minimum coverage just won’t do the job.

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Car insurance is about protecting your financial stability and making you whole again after an accident or other loss. Minimum coverage does not do either of those.

Reason #1: Vehicles Cost More Than Ever

Minimum car insurance, called liability insurance, will only pay one of two things. One item that liability coverage will assist in paying is the damage to other vehicles that you cause in an at-fault accident. However, minimum levels of liability insurance likely won’t be enough to cover all of the damages.

The highest state minimum for property damage liability is $55,000, and only one state—Wisconsin—has that high of a level.

The second highest level is $25,000 in coverage, though most states only require $10,000 or $15,000 in coverage to fix another’s vehicle. The lowest property damage liability levels are found in California, Massachusetts, and New Jersey, with only $5,000 in property damage coverage needed.

If your accident wrecks another vehicle, minimum levels might not be enough to cover the replacement cost of the vehicle. Many cars these days sell for $30,000, $40,000, or $50,000 or more.

Wreck a $30,000 vehicle with only $5,000 or $10,000 in coverage and you are looking at some high leftover costs for which you’ll be responsible. You can be sued for damages, as well as for other costs, such pain and suffering. A judge can order you to sell off your assets such as a house or investments, or the courts can garnish your wages until you pay off the remaining costs.

Reason #2: Health Care Costs Are Expensive

Similarly, the second part of liability insurance—bodily injury liability—is likely not enough to cover all costs at only minimum levels, either. Bodily injury liability pays for the medical bills of those you injure in an at-fault accident. State levels just don’t keep pace with the high cost of health care bills from a car accident.

While crash rates, injuries, and deaths are declining, the cost of health care is not.

Information cited by the Rocky Mountain Insurance Information Association (RMIIA) maintains that traffic accident injuries occur at a rate of 1 every 14 seconds, and the overall costs for such injuries totaled $99 billion in 2010.

Medical bills from car accidents can easily top $10,000 just for a ride in an ambulance to an emergency room, testing, and being held overnight for observation. Experts recommend no less than $100,000 per person and $300,000 for the entire accident for bodily injury liability. The coverage levels required by state minimum coverage laws range from less than half to almost a tenth of that amount.

Again, your insurance will only cover up to the limits that you purchase. If there are costs over your limits, then you will be responsible for those amounts. You can certainly be sued, and judgment amounts can be sky-high, especially if you were driving recklessly.

Reason #3: It Doesn’t Cover Your Vehicle

Another big reason why minimum coverage is just not enough to protect you and your assets is that it doesn’t cover any damages or other losses to your vehicle. If you cause an accident, minimum coverage levels go to paying for damages that you caused to others, not your own. The only one who will be paying to repair your vehicle is you.

Furthermore, if your vehicle is damaged some other way, such as through a bad storm or if you hit a deer, minimum levels of coverage also will not pay for repairs. Data regarding losses from hitting a deer from the Insurance Information Institute holds that average losses amounted to more than $3,000 in 2010 to 2011.

Without full coverage, you will likely have about $3,000 in damages to your vehicle to fix out-of-pocket if you hit a deer.

There are so many things that can cause damage to your vehicle that having full coverage should really be viewed as a necessity, not an option. Lenders require you to carry it as long as you have a vehicle loan, but far too many people think they can drop the coverage once they have paid off their loans. Fire, flooding, vandalism, and other acts of nature can all be covered, but you have to have collision and comprehensive to protect the value of your car.

The only instance where it is recommended to drop full coverage is once your vehicle has depreciated in value to the point that the coverage actually costs more than the car is worth. Most experts put this value at $1,000.

Reason #4: It Doesn’t Cover Theft

Furthermore, minimal coverage also doesn’t cover the theft of your vehicle. Many drivers think that they are safe from theft because they don’t drive flashy sports cars or high-end luxury vehicles, but not all car thieves are living out their own private versions of “The Fast and the Furious”. Older models are easier to steal and they have interchangeable parts that can be sold quickly.

Theft is only covered by comprehensive auto insurance, which is part of full coverage options. If you don’t have full coverage, the cost to replace your vehicle will be yours alone.

According to 2009 data from the Federal Bureau of Investigations, the average cost of a stolen vehicle was $6,505.

To add insult to injury, a bank will not forgive your car loan just because the vehicle was stolen. Instead, you will be responsible for paying off the loan for your stolen car, as well as the loan for a new vehicle.

Reason #5: Your Injuries Aren’t Covered

Minimal insurance coverage levels also don’t cover any injuries that you may have. If others have injuries from an accident that you caused, then you will likely have injuries of your own. Without full coverage, you will have to rely on your health insurance to pay for your injuries.

Your health insurance might have high deductibles and co-pays for services, or it might only pay for a percentage of your injuries. If you have $30,000 in medical bills from the hospital, and your health insurance will only pay 80%, then you are still responsible for paying $6,000 of your bills.

Personal injury protection, or PIP, is a coverage option that can help pay your medical bills as well as other costs like lost wages. It is part of mandated coverage in some states, but there are minimum amounts that likely won’t cover all of your injuries.

If you have no medical coverage whatsoever, then having levels far above minimum PIP levels is a must. Even moderate car accidents can cause you to have medical bills that will be thousands of dollars just from getting checked out at the ER.

Reason #6: It Doesn’t Protect You from Hit-and-Run Drivers

The barest amount of insurance coverage also doesn’t protect you from hit-and-run drivers.

Few people think that a hit-and-run accident can happen to them, but the website Wiser Drivers maintains that hit-and-run accidents occurred at a rate of one out of every eight accidents from 2003 to 2006.

Uninsured and underinsured motorist coverage will pay if you are hit by a hit-and-run driver, or even a driver who has no insurance or too little insurance. Having such coverage is the best way to ensure that your injuries and damages will be quickly taken care of. It also covers any other passengers in your vehicle.

Reason #7: It Doesn’t Cover Other Expenses

The lowest amount of coverage certainly doesn’t cover all of those other expenses that accompany accidents or other losses. Injuries and car repairs aren’t the only source of expenses after a crash or a loss such as theft.

Likely as not, you will need to have your vehicle towed. Unless you have towing coverage from your insurance or an auto club such as AAA, you will be paying a couple hundred dollars to have your vehicle towed to an auto body shop or garage.

Then, you will be out of a vehicle until yours is repaired or replaced, which can take a couple weeks at least. If you don’t have rental car reimbursement, you will be paying daily rental rates that average around $50.

Reason #8: It Won’t Cover Your Rental Vehicle

While not as important as all of the other explanations for why you need more coverage than minimum levels, one last reason is that minimum coverage will not be enough at the counter when you want to rent a car. This is true if you need to rent a vehicle for vacation, if your vehicle is in the shop, or if you need to rent a moving truck.

Minimum levels of coverage will only take care of your liability; they will not cover damage to a rental vehicle. In such an instance, you will likely need to buy additional rental car insurance at the rental counter, which can nearly double the daily cost of renting a vehicle.

By now you should be convinced of your need for full coverage, so put your ZIP code in the FREE search box on this page to get total coverage car insurance quotes instantly!