If you operate a vehicle on your state's highways, you must have evidence of financial responsibility in the vehicle at all times. Financial responsibility can be satisfied in different ways, but the most common way to meet this legal obligation is to buy auto liability insurance. It is important for you to understand the minimum limits for your state and to ask yourself if your state's minimum auto insurance is enough.

State Minimums Only Require Liability Insurance

Liability insurance only offers protection for the other driver, not you. It is designed to pay for personal injury or property damage caused by an at fault auto accident. It covers medical expenses, loss of wages and other expenses related to an accident.

What Do These Minimum Liability Limits Mean?

Even though each state requires liability coverage, the minimum limits of coverage will vary by state. Just as an example, let's look at the state of Texas, where the minimum limits are:

• $ 30,000 Bodily Injury Liability (each person)
• $ 60,000 Bodily Injury Liability (each accident)
• $ 25,000 Property Damage Liability (each accident)

If you cause an accident, the maximum this policy will pay for injuries sustained by occupants of the other vehicle(s) is $60,000, no matter how many people were injured. The maximum it will pay for damages to other people's property is $25,000. If you were to totally destroy a $45,000 BMW, you would be personally responsible for $20,000. Even though these minimums keep you legal, they may not be enough.

Minimum Insurance Coverage Does Not Protect Your Vehicle

Do you drive an older vehicle that you could easily replace out-of-pocket? If so, liability only coverage may meet your need for insurance. Your state's minimum coverage provides absolutely no insurance to repair or replace your vehicle that could be damaged or destroyed in an accident. There is also no coverage for your medical or other expenses that could be related to an accident.

Minimum Coverage Offers No Protection Against Uninsured Drivers

It is important to understand that many drivers on your state's highways have absolutely no auto insurance. Chances are very good that if you are involved in an accident, the other driver will be uninsured. If you don't have an auto policy that provides collision coverage or uninsured motorist protection, you will be personally responsible for repairing or replacing your vehicle.

Even though your state's minimum will allow you to legally operate a vehicle on state highways, it may expose your assets to substantial losses. It is always best to discuss your insurance needs with your agent.

Contact us today and we will help you better understand auto insurance. We can help you design an insurance program within your budget that keeps your personal assets properly protected.