State Minimum Auto Liability Insurance - Good Idea?

state minimum auto liability insurance

Buying Cheap State minimum auto liability insurance seemed like a good idea, but is it...?

Should I Consider Buying State Minimum Auto Liability Insurance?


But First, Let's talk about what is State minimum auto liability

It's the minimum requirement required by your state to operate a vehicle legally, regardless if you own the vehicle or borrowing a car. 

Some examples of what the minimum auto liability looks like we'll use California in this case.

The State Minimum in CA is 15/30/5.

These numbers are in $1,000 increments, 15 = $15,000

  • The first number is the bodily injury amount the insurance company would be responsible for paying a single person you injured in an accident.
  • The second number is the total or aggregate amount the insurance company will pay-in-total for all parties injured.
  • The third number is the total amount the auto insurance company will pay for property damage to another vehicle or actual property.

So, if we use the example picture above - someone obviously ran into the back of a limo, which also pushed that vehicle into a limo parked in front.

As you might be asking yourself is how much would it cost to repair those vehicles.

If you said more than $5,000, you'd probably be right.

The problem is if you purchased state minimum auto liability insurance in California, you would only have up to a maximum of $5,000 coverage to repair or replace property you damaged in an accident.

Chances were pretty good the limo owners had insurance for collision; otherwise, they would be out of luck with your minimal coverage.

But, if you think that's the end of the story, you'd be wrong.

Remember, insurance companies don't like paying out for claims when it wasn't their customers' fault. Even if the Limo owner did not have collision insurance, you probably could imagine the owner would want to be reimbursed.

  • Congratulations - you are now being sued by the owner or, more likely, the vehicle owner's auto insurance company.

Sure you had insurance, albeit state minimum auto liability coverage with $5,000, but let's say the damage above was $15,000 to both vehicles.

After the insurance company(s) pay to have, the vehicles fix it's now time to collect the outstanding balance of $10,000. This is known as subrogation.

In simple terms, this is when the insurance company comes after you for monies owed.

Typically, you receive a notice from the legal department demanding payment, and if that fails, it's off to court. The insurance company will provide police records and a statement from the vehicle owners, and you will lose.

Now, the course of action will probably be something like a Judgement for balance owed, court costs and interest. They can place a garnishment on your paycheck until the money is paid in full. They could put a lien on your property, and in some states, you might have your licensed suspended.

But heck, you saved $50 a year by buying the State minimum car liability insurance sounded like a good deal - not.

Get the right auto insurance coverage

Should you consider buying state minimum auto liability insurance?

If you read the info above, then hopefully you understand no one should ever, but if you must.

Are you 18 - 21 years old, single with no assets and low a probability of earning more than minimum wage for the considerable future? You might be a candidate for basic state minimum vehicle insurance.

You are independently wealthy and don't mind paying thousands or tens of thousands of dollars every time you have a fender bender and hope no one has more than $15,000 in medical expenses.

Your vehicle basically sits in storage year-round and just want to keep the car legal in case you have to move it on or off a trailer.

Otherwise, we recommend no one even consider minimum liability car insurance.

Auto insurance liability coverage

Medical Liability Insurance Coverage

We’ve just discussed state minimum auto insurance for property damage, but let discuss bodily injury coverage.

What happens if the person in the other vehicle needs to go to the hospital and you’re at fault?

Who’s going to pay the medical bill?

Let’s recap your state minimum coverage – 15/30/5

So, in California, you would have $15,000 per person and up to $30,000 for all parties injured by you while driving your vehicle.

As you might imagine, $15,000 would probably cover a small accident if someone just needed a few stitches, but what if they needed to be admitted to the hospital or received a few stitches, but also called a lawyer and now want to sue?

Remember, your decision to accept the state minimum car insurance will only cover up to $15,000 per person or up to $30,000 for all parties injured, period. 

When someone decides they're injury in now worth a million dollars and wants to collect, don’t look for your insurance company to help.  Their responsibility ended at $30,000.  They will not be sitting next to you in court again because their burden of paying has been completed. 

We advise speaking with a licensed insurance agent or broker to discuss the costs and options available to keep you from having a bad day for years to come. 

Your financial responsibility does not end with only carrying a minimum liability car insurance policy.  The injured party will want their pound of flesh, and the insurance company will be off the hook.  You, my friend, will be the sole person looking for legal representation and trying to find a way to save your financial future.

Think twice when looking online for auto insurance.  Buying car insurance online is not like ordering a product from Amazon.

Car insurance is primarily designed to protect you from financial harm if you have an accident.  But buying the cheapest auto insurance policy may only be slightly better than having no insurance at all.

Speak with an insurance professional and listen to their advice, as it might save you a lot of time, money, and energy defending yourself in a car accident lawsuit. 

if you see the value of Higher Liability Limits, give us a call

You now realize and understand the benefits of higher liability limits and want financial well being than please call us directly at 314-569-1010 or click for quotes HERE

About the Author

John Espenschied is a long-time veteran of the insurance industry. He has worked in various positions within the industry for over 20 years, and for the past 15 years, he has been the owner and operator of Insurance Brokers Group, an independent insurance agency. John loves advising people on the insurance that meets their needs and goals, whether it be for personal or commercial purposes.

John is married to Melissa, and they have three children together, as well as three grandchildren. In his spare time, John enjoys golfing and playing in the golf league, biking to their local brewery along the Missouri river, and going on motorcycle rides when the weather is nice.

John Espenschied

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