2 Misconceptions About Auto Insurance "State Minimum Coverage" & Their Costly Consequences

If you have an automobile, then odds are you have auto insurance. If you don't, then it is important to obtain it, whether your state requires it by law or not. While driving without auto insurance can lead to legal and financial consequences, making the wrong choices when choosing your auto insurance policy, including making assumptions about "state minimum" auto insurance, can also lead to very costly consequences later on. Read on to learn about two misconceptions people make about state minimum auto insurance policies, their costly consequences, and what to do instead. 

Misconception #1: "Full Coverage" Auto Insurance is Much More Costly Than "Liability" Insurance

If you typically obtain an auto insurance policy that provides the "state minimum" coverage (often called a liability auto insurance policy), then you likely know that, if you were to get in an auto accident and be found to be "at-fault," your insurance company would only pay for repairs made to the vehicle of the automobile(s) you collide with and will only compensate drivers and passengers in the other vehicle for their injuries. 

You would likely love to obtain a policy that would also cover the cost of repairs to your vehicle and any medical bills resulting from injuries you sustain during the accident, but you may just assume a policy that provides more than state minimum coverage would be much more expensive than the state minimum coverage. 

You may have this assumption due to side-by-side quotes you obtained for full coverage vs. state minimum auto insurance policies when you were a brand new driver at the age of 16 or at any time in the past when you were younger, had a newer car, just had a lapse in insurance coverage, or not long after being involved in an auto accident. 

The truth is that the cost difference between state minimum auto insurance compared to policies that also cover damage to your vehicle and the cost of medical treatment you may need after an accident vary greatly depending on many of the factors that affect auto insurance rates that can change greatly throughout your life. However, for an adult driver with a relatively clean driving record, this difference can be as little as $10 to $20 each month. 

If you have had state minimum coverage for years due to an assumption that full coverage insurance is always much more expensive, then get a quote from an auto insurance company online right now for full coverage auto insurance. You may be shocked to see that the huge difference in cost you were quoted many years ago is now just a difference of a few dollars. Then, if you were to be found at-fault for an auto accident in the future, you won't have to pay for your costly vehicle repairs out of pocket. 

Misconception #2: Your Liability-only Policy Will Pay for All Damage You May Inflict If You Were to Be Found At-fault for an Auto Accident

Many drivers who obtain only state minimum auto insurance coverage falsely assume that while these policies unfortunately will not cover the cost of their vehicle repairs or injuries after they are found at-fault for an auto accident, they do cover the cost of all damages to other vehicles, property, and people injured in the accident. However, this is a misconception that it is important to know the truth behind, because many states require require only very little bodily injury and property damage coverage. If the cost of property damage or bodily injuries you inflict during an auto accident exceed what your policy covers, you are responsible for paying the difference. 

For example, if you are a driver in Ohio with the state minimum auto insurance coverage, your policy covers $25,000 bodily injury liability per person (up to $50,000 if more than one person is injured in the accident) and $25,000 worth of property damage per accident. 

If you lived in Ohio, had state minimum auto insurance coverage, and caused extensive damage to a vehicle worth $50,000 that makes replacement more affordable than the cost of repairs, then you would have to pay $25,000 out-of-pocket to the other driver. If you caused a multi-vehicle accident, which are common on icy Ohio roads in the winter, then the cost of repairing all of the vehicles could also greatly exceed the $25,000 your auto insurance company will cover. 

With the high cost of medical expenses today, it is also easy to see how extensive injuries suffered by just one person in the other vehicle could cost lead to the accumulation of much more than $25,000 worth of medical bills, and if that automobile contained an entire family, medical expenses could easily cost millions of dollars.

If you don't have the cash to cover the balance above and beyond what your liability policy covers, then don't think you will be "let off the hook" for the charges. The family would easily win a personal injury lawsuit against you, and you could then look forward to wage garnishments and even your assets being seized by a court until the full cost of the damages you inflicted were paid for. 

If you automatically obtain a state minimum auto insurance policy every time you renew your auto insurance, then realize that you could only be saving a few bucks, and you would regret not spending the extra small amount needed to upgrade to a full coverage insurance policy if you were to be involved in an auto accident where your vehicle was greatly damaged and/or you inflict more damage on another vehicle and the passengers in it than your policy covers the cost of. Look into full coverage auto insurance quotes, and you may be surprised that you have been putting your financial future at risk just to save very little every month.