Bare Bones Coverage Can Lead To Problems
When it comes to auto insurance, it can be tempting to choose the lowest coverage option available in order to save money on premiums. In many states, the minimum coverage required by law is relatively low and may seem like a good option for those on a budget. However, choosing state minimum coverage for your auto insurance may not always be the best idea. Here's why:
1. Minimum coverage may not protect you financially in the event of an accident. State minimum coverage is exactly what it sounds like – the minimum amount of coverage that you are required to have by law. This means that it may not provide sufficient protection in the event of an accident. If you are found at fault in an accident, minimum coverage may not cover the full cost of damages or injuries sustained by the other party, leaving you to pay out of pocket.
2. It may not cover damages to your own vehicle. In addition to covering damages to the other party in an accident, auto insurance should also protect you financially by covering damages to your own vehicle. However, state minimum coverage may not provide enough protection for your own car in the event of an accident, leaving you to pay for repairs out of pocket.
3. It may not cover non-collision damages. Auto insurance should also protect you from non-collision damages, such as theft, vandalism, or natural disasters. State minimum coverage may not provide enough protection for these types of damages, leaving you vulnerable to financial loss.
4. It may not be accepted by lenders. If you are financing your vehicle or leasing it, your lender may require that you have a certain amount of coverage in order to protect their investment. If you choose state minimum coverage, it may not meet the requirements of your lender, leaving you in violation of your loan or lease agreement.
If your auto insurance coverage is not enough to cover the cost of an accident, you may be responsible for paying the remaining balance out of pocket. This can be a significant financial burden, especially if the accident resulted in significant damages or injuries. Even if the other party is covered by their Underinsured Motorist coverage, remember that their insurance company has an army of attorneys whose job is it to recover as much as possible.
If you are found to be at fault in the accident, you may be sued by the other party in an effort to recover the full cost of damages. If the court rules in favor of the other party, you may be required to pay the remaining balance in addition to any legal fees.
It is important to have sufficient auto insurance coverage to protect yourself financially in the event of an accident. While it may be tempting to choose the lowest coverage option available in order to save money on premiums, this could leave you vulnerable to significant financial loss if you are involved in an accident.
