Minimum Requirements for Liability Insurance

Minimum Coverage

• Minimum coverage policies, also known as liability insurance, cover bodily injury and property damage. Each policy has a cap on the amount the insurance company will cover for bodily injury per person, bodily injury per accident and property damage per accident that meets the minimum requirement for the state. Minimum insurance policies pay for the medical expenses and property damage of other drivers involved in the accident. It does not cover expenses incurred by the policy holder. Policy holders need to purchase an additional comprehensive and collision plan to cover the cost of damages to their vehicle.
  
  

State Requirements

• Every state, with the exception of New Hampshire and Wisconsin, requires that drivers carry a liability insurance policy. The minimum limits for these policies vary by state. For example, Kansas requires $25,000 in bodily injury per person, $50,000 in bodily injury per accident and $10,000 in property damage, according to Edmunds (see Resources for your state). Some states will waive the insurance requirements for drivers who post a bond with the DMV or a third-party financial company. This bond will cover the cost of medical bills and property damage in the event of an accident. For example, Ohio residents can post a $30,000 bond in lieu of auto insurance, according to the Ohio Department of Insurance.
  
  

Additional Policy Requirements

• In addition to the minimum insurance requirements, many states require that drivers purchase a personal injury protection or an uninsured/underinsured motorist protection policy. Personal injury protection pays for the policy holder's medical bills and pain and suffering if he is involved in an accident. Uninsured/underinsured motorist protection pays for medical bills and property damage if the policy holder is involved in a hit and run, or in an accident with a driver who does not have insurance.
  
  

Warnings

• Driving without proper insurance can result in financial or legal problems for the driver. Most state Department of Motor Vehicles offices require that drivers provide proof of insurance before they can register a vehicle. If the driver's insurance policy lapses, the DMV may suspend the driver's license plate. Drivers can receive citations or have their car impounded if they are pulled over while driving uninsured.