Posted December 5th, 2012
When people talk about minimum limits for car insurance, they are referring to the minimum amount of Liability Insurance for Bodily Injury and Property Damage required by state statute. The numbers are normally expressed as a series of three numbers. (I. E. 25/50/20). The first two numbers (25/50) both refer to bodily injury with the first signifying the maximum amount a person would receive and the second number of the pair is the total limit for an accident. The final number (20) is the total amount of coverage that can be used for property damage.
In the example, listed above of 25/50/20, if an insured caused an accident, the maximum his insurance policy will pay to the injured parties would be $25,000, per individual to a maximum of $50,000 per accident for bodily injury and a maximum $20,000 for any damage to the vehicles that were struck. If the damages exceeded that amount of coverage, the driver or the owner of the at-fault vehicle could be held liable for the rest of the damages.
For example, you drove a car with that carried minimum limits of 25/50/20 and you were the cause of an accident that damaged two vehicles and injured three people, (Say you were following too close and rear-ended a vehicle driving it into another.) you could easily exceed the coverage available. If the first two people sued you for bodily injury claim of $25,000 each and then a third injured party sued you, there would be no coverage available for that individual. Also if the first car was totaled for $20,000 in property damage, any other vehicle would have no coverage available. In both cases, the courts would look to you to come up with the rest of the money. If you didn’t have the money they could garnish your wages or secure other assets you might have.
While most state agree that private passenger vehicles must have some form of liability insurance on them to protect other vehicles and drivers in case of an accident, they don’t all agree on what the minimum amount of insurance should be. Each state makes it own rules; each state’s legislators set the minimum limits of insurance that must legally be carried by a vehicle. As you can clearly see by the example above, that minimum limit may not be enough to fully protect you in the case of an at fault accident.
The easiest way to find out about your state minimum auto insurance requirements is to contact your local independent insurance agent. He can not only give you the current states requirements, but can explain exactly how those numbers fits your individual situation. He can tailor an insurance policy that not only satisfies the minimum, but addresses any additional needs that should be addressed.
It is EXTREMELY rare that anyone is carrying adequate limits for their financial situation when they are carrying minimum limits.