What covers a basic car insurance in the United States?
In the United States, having auto insurance is not only a financial recommendation, but a legal requirement in almost all states. Each State establishes its own minimum coverage requirements, which gives rise to the so -called “basic auto insurance”. This type of policy is designed to offer mandatory minimal protection, and although its coverage is limited, it meets the legal requirements to drive. Next, we explore in detail which covers a basic auto insurance in the United States, how it varies according to the State and why it is important to know its limitations.
What is basic auto insurance?
The basic auto insurance, also known as a minimum mandatory insurance or state minimal coverage, is a policy that includes only the types of coverage required by law in the state where the vehicle is recorded. In essence, this insurance is not designed to protect the holder of the holder from his own damages, but to cover the driver’s responsibility against third parties in case of an accident.
Common Basic Insurance coverage
Although each state can establish different types and limits of coverage, there are certain common elements that are usually included in most basic insurance:
1. Civil liability for damages to third parties (Bodily Injury Liability)
This coverage pays medical expenses, loss of income and legal costs if the insured driver causes injuries to another person in an accident. It does not cover the injuries of the insured driver or their passengers.
For example, if the driver causes an accident and the other driver suffers serious injuries, insurance will cover his medical invoices to the limit established in the policy.
2. Civil liability for property damage (Property Damage Liability)
It covers the damage that the insured driver causes the vehicle of another person, to a fence, a building or other property. For example, if the insured clashes against another car or demolishes a traffic signal, this coverage pays for repair or replacement.
3. Protection against drivers without insurance or insufficient insurance (UNINSured/Underinsured Motorist Coverage)
This coverage is mandatory in some states and optional in others. It covers the insured and their passengers if they are run over or collided with a driver who has no insurance or whose insurance is not enough to cover the damage caused.
4. Protection against personal injury (personal injury protection, PIP)
In certain states, especially in those known as “No-Fault” (without guilt), such as Florida, Michigan or New York, this coverage is required. PIP pays medical expenses, loss of income and some additional costs (such as domestic services) of the driver and its passengers, regardless of who was to blame for the accident.
Coverage limits
Basic auto insurance has limits established by the State. For example, in California, the legal minimum is:
$ 15,000 for injuries or death of a person.
$ 30,000 for injuries or death of more than one person.
$ 5,000 for damage to property.
These limits may seem enough, but in practice, the costs of a serious accident usually exceed these amounts, which can expose the driver to personal demands or debts if the damages exceed what is covered by the insurance.
What does not cover basic insurance?
It is crucial to understand the limitations of the basic auto insurance, since many people assume that they will be completely protected with this coverage, which is not true. Next, some aspects that are generally not covered by a basic policy:
Damage to the vehicle itself: if the insured driver is to blame for the accident, the basic policy will not pay for repairing his own car. For that, collision coverage is needed.
Theft or vandalism: it does not cover robberies, acts vandalism or damage caused by the weather. Comprehensive coverage is required (comprehensive).
Crane expenses or road assistance: These services are usually offered as extras and are not included in the minimum insurance.
Cars rented or provided: the basic insurance usually only covers the insured vehicle and may not offer full coverage if another vehicle is driving.
Commercial use of the vehicle: if the car is used for commercial purposes (for example, such as Uber or for deliveries), personal basic insurance may not apply.
State variations
Insurance requirements vary significantly between states. For example:
Florida demands PIP and coverage of property damage, but does not require responsibility for bodily injuries.
Texas requires responsibility for injuries and property damage, but not PIP.
New Hampshire does not force you to have auto insurance, but financial responsibility in case of accident, which in practice implies having some type of coverage.