These Are the 3 Biggest Downsides of Getting Minimum Auto Insurance


Minimum coverage auto insurance means buying the least amount of auto insurance required by law. Almost every state requires liability insurance, but many don’t mandate much, if any, coverage beyond that.

Minimum coverage auto insurance can be a lot cheaper than full coverage ($787 a year on average, compared to $3,296, according to research from The Motley Fool Ascent). But there are some serious downsides to choosing it. Here are some of the biggest disadvantages of buying only the auto insurance coverage mandated by the state where the car is registered.

1. There’s a risk of a personal lawsuit

One of the biggest risks of buying only minimum coverage auto insurance is the potential to be sued after causing an accident.

See, states usually don’t require large policy limits. It’s possible to comply with the law in some places with as little as $15,000 per person and $30,000 per accident in bodily injury liability coverage.

Even a relatively minor injury resulting in hospitalization could very quickly lead to bigger bills than that. And drivers who don’t have enough insurance could find themselves being personally sued with their own assets at risk. This is a huge disadvantage, as legal bills and damages could have to be paid out of a driver’s checking account.

2. Insurance won’t cover any repair or replacement of a policyholder’s own vehicle

States don’t require collision insurance, which pays for a policyholder’s vehicle repairs after a crash. Collision coverage will also pay for the fair market value of a vehicle if it’s totaled. If a driver gets into a crash that isn’t someone else’s fault, they can’t make a claim against another person — and also can’t turn to their own insurer without collision coverage.

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Other things can also go wrong with a car, like hail damage, theft, vandalism, or a host of other problems. Comprehensive insurance would cover those things — if a driver had added it to their policy. States don’t require it, though.

Not having any coverage for collisions or other kinds of damage is a huge downside of buying minimum coverage auto insurance since neither coverage type would be part of a minimum coverage policy. No one should go without these coverages, unless they could just write a check to pay for a new car if they needed one.

3. Rental car costs will come out of pocket when a car is damaged or totaled

Finally, if a car is damaged or totaled, most people are going to need another vehicle to drive while theirs is being fixed or until they get a new one. A driver who has this happen but who doesn’t have rental car coverage could be forced to pay out of pocket for a rental vehicle. These prices could come in at around $100 a day or more.

A minimum coverage policy won’t have any coverage for rental cars at all. A driver with only liability coverage would be on their own to try to figure out how to get around if something went wrong with their car that wasn’t the fault of another driver. This could leave them stranded if they didn’t have the money to pay for a rental.

These disadvantages are, most often, not worth the benefit of saving on premiums. Motorists should make sure they have the coverage they need, and shopping around with the best cheap auto insurance providers is a good way to get it. Paying for it is well worth protecting against the kinds of devastating losses that could happen with just minimum coverage auto insurance.

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