As an independent insurance agent, I have received many calls from consumers who request auto insurance quotes with the state minimum limits.
Most of these people assume as long as they are legal then they have no concerns.
What they don't realize is that they are still legally responsible for the full amount of liability that arises if they are at fault in an accident.
Lets take for example a consumer purchasing insurance in a state that only requires a bodily injury limit of $12,000 per person with a $25,000 limit per accident and a minimum property damage limit of $7,500.
If the consumer buys these minimum limit they may be legal according to the state but there is a huge cap in liability coverage if they are at fault in an auto accident and the people in the other car have medical expenses and property damage that exceeds the state minimum coverage.
Suppose two people in the other car are injured and there medical cost are $30,000 each and the car that they are driving is totaled which is worth $25,000.
In a case like this the person at fault with minimum liability limits would be personally responsible for any medical cost per person that exceeds their policy limits of $12,500 per person.
In this case they would be personally responsible to pay $35,000 in medical costs and since they only have $7,500 of property damage coverage they would be responsibility to pay the difference of $25,000 (what the car is worth) and $7,500 which is $17,500.
Using the above example a person with state minimum limits would be legally reliable for a total amount of $52,500.
Since they don't have enough insurance to cover their legal liability most likely the not at fault person's insurance would pay the difference, then go back against the person with minimum liability limits and collect monthly payments from the at fault driver until the balance is settled.
In this scenario it would be like having a second mortgage.
What makes this even more devastating is that the person with state minimum liability limits most likely could have purchased higher limits that would have protected them for as little as $10 to $30 a month.
Don't be a victim of "Legal is the Right Choice.
" Request from your agent higher limits and compare the cost of insurance.