Auto insurance 101: what is basic car insurance coverage?

There are a few types of car insurance coverage to choose from and it can seem a bit daunting to select the best for your needs. We’ll go over the main points here so you can feel more informed as you decide.

Keep in mind that the basic coverage you need depends on the state you live in, the age of your car and whether you own or lease it.

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

To us, “basic car 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 the bare minimum typically means

liability coverage, which includes bodily injury liability (for injuries to others) and property damage liability (for damage to another vehicle if you cause an accident).

Some states require uninsured or underinsured motorist coverage to pay for your injuries or damages from an accident caused by someone who has no—or insufficient—insurance coverage.

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 an expensive sports car in a highway accident—not the cheapest hard braking incident. Will the “basic” state minimum liability coverage be enough to fix it? Probably not. The rest of the repair bill may come from your pocket. And, equally important to note, your basic auto insurance will cover damage to their car—but not yours.

Simply put, 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 coverageshould you have?

The answer is different for everyone. We generally recommend “full coverage” (AKA 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, connect with us via email chat or phone. We’re here to help you figure things out.