Auto Insurance 101: What is Basic Car Insurance Coverage?

As you can imagine, we receive questions every day about auto insurance. Most questions are easy for us to answer — but that’s because unlike you, we’re thinking about insurance every day!

So we like to pause, remind ourselves that insurance is complicated, and answer some of the questions that bubble to the top.  Like this one: What is Basic Car Insurance Coverage?

Basic car insurance is not a super well-defined term and can mean different things to different people.

To us, “basic auto insurance” refers to the bare minimum coverage a driver needs to be compliant with local laws. Car insurance requirements vary from state to state, but in Rhode Island the bare minimum means two things: bodily injury liability and property damage liability.

 

car accident between two cars near stop sign

 

Specifically, Rhode Island requires the following to cover damages an individual is legally liable for:

  • Bodily Injury Liability: covering $25,000 per person, up to $50,000 per accident for injury you cause to another person in an accident.
  • Property Damage Liability: $25,000 for damage that you cause (to property or other vehicles).

So you may be asking yourself, “OK, so is basic car insurance coverage enough for me?” As with all coverage questions, it depends on your tolerance for risk and financial situation. But let’s dig a little deeper.

Imagine you’re running late for work. You speed through a yellow light and hit a minivan making a right turn in front of you. It’s a mom taking her three kids and the neighbor’s kid to school. Even if none of them has serious injuries, will $50,000 of bodily injury liability be enough to cover ambulance rides, ER visits, and follow-up appointments for five people? Every situation is different, but especially if multiple people are injured, $50,000 can be used up pretty quickly in some claims scenarios.

Or another example, let’s say you rear end a Lambo in a highway accident- not the cheapest hard braking incident. Will the “basic” coverage ($25,000 of property damage) be enough to fix it? Probably not. The rest of that repair bill would come from your pocket. And, equally important to note, your basic auto insurance will cover damage to their car — but not yours.

So even if you lucked out and the new bumper, tail lights, and spoiler on the Lambo were only $25,000, you’d still be on the hook for whatever it cost to fix your own car. (In these scenarios, the state minimums may not cover all your costs, which is why we recommend that customers consider purchasing more coverage).

 

Put simply, basic car insurance leaves a big gap between the legal requirements, and what will actually take care of you and the other people and cars that could be involved.  

 

So what coverage should you have?

The answer is different for everyone. We generally recommend “full coverage” (a.k.a. comprehensive and collision coverages) for anyone with a car newer than ten years old. Surprisingly, full coverage may not be as expensive as you might think. Your coverage should really be based on you though. If you’re trying to decide the right coverage (HiRoad customer or not!) give us a call, email, or chat! We’re here to help.