Minimum Automobile Insurance Coverage
The amount and type of automobile insurance coverage required by law varies from state to state. At a minimum, all states, except for two, require Bodily Injury Liability and Property Damage coverages, which pay claims against the policyholder if it is determined that he or she is legally responsible for causing the accident.
In addition to the minimum automobile insurance coverage required, many motorists are able to purchase additional coverages, such as Uninsured ("UM") and Underinsured ("UIM") Motorist insurance. UM pays benefits to the policyholder when he or she is injured by a motorist who does not have any insurance coverage. UIM pays benefits to the policyholder when he or she is injured by a motorist who has insurance, but the insurance levels are inadequate to pay the full claims of the policyholder. Even though UM and UIM is typically optional, several states require a policy holder choosing UM or UIM coverage to purchase certain minimum amounts of coverage.
Medical Expense coverage, also known as Personal Injury Protection (PIP) or First-Party Coverage, generally pays medical expenses, hospital expenses, lost wages, and disability expenses on behalf of the policyholder. Most states do not regulate this type of coverage.
Some states have "no-fault" laws, which means that your auto insurance company pays covered medical bills for injuries sustained in an auto accident, regardless of fault. Some of these states restrict the ability of the injured party to sue for damages based on tort law. It is important to discuss your rights with an insurance agent or attorney.
More information on the minimum amount of automobile insurance required by each state is available on the State page.
The liability limits required by each state are expressed in a three number format, such as: 25/50/20. The first number refers to the maximum liability per person for bodily injury, the second number refers to the maximum liability allowed per accident (regardless of the number of people injured), and the third number refers to the liability limit for property damage. The numbers are usually expressed in thousands of dollars. For example, in a state with 25/50/20 liability limits, the first number represents the maximum amount that each person injured could receive, with the second number placing the cap on the amount allowed per accident. As such, each person would receive a maximum of up to $25,000, with a total of $50,000 allowed for the entire accident. This divides quite easily if only two people are injured; however, if three or more people are injured, the maximum amount per accident remains at $50,000. In that case, whoever files first has first access to the $50,000 cap. It may be possible for the remaining people injured to sue the policyholder for their portion that was excluded by the per-accident cap. In this case, the maximum amount of coverage per accident for property damage is $20,000. Additionally, some states are considered "no-fault" states and require Personal Injury Protection coverage.
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