Most states require you have car insurance and laws that outline the minimum level of coverage you must buy. The state required car insurance coverage differs greatly from state to state. All state mandates include liability coverage, but limits vary, and then some states require medical coverage for you and your occupants or uninsured motorist coverage. So what may be right for you in one state can change if you move states.
Liability auto insurance has two parts. The first is bodily injury and the second is property damage. Bodily injury pays for the medical expenses of those you harmed in an auto accident, up to your limits. Property damage covers the damage you caused to another vehicle or to other property, such as a fence, in an auto accident, again up to your limits. Liability coverage does NOT cover your injuries or your vehicle, only those outside your vehicle whom you caused damages to.
Here’s how to read auto insurance liability minimum limits:
First number: Bodily injury liability maximum for one person injured in an accident.
Second number: Bodily injury liability maximum for all injuries in one accident.
Third number: Property damage liability maximum for one accident.
For example, if you live in California, the minimum liability limits are $25,000 for injury liability for one person, $50,000 for all injuries and $10,000 for property damage in an accident (written as 25/50/10). Plus, New York requires you to have personal injury protection (PIP) and uninsured motorist bodily injury coverage (UM).
Keep in mind that state requirements are the lowest limits you can carry and may not necessarily be adequate. A car accident can cost far more than the limits mandated by most states as medical expenses have skyrocketed and the value of vehicles have gone up. Insure.com’s consumer analyst, Penny Gusner, recommends you carry at least $100,000 of bodily injury protection per person and $300,000 per accident and $100,000 of property damage liability (100/300/100). Higher liability limits offer better protection and doesn’t cost that much more, so if you can afford it, raise up your limits.