Why Minimum Limits Auto Insurance Might Be Your Best Option
Auto insurance is a requirement in most states, as it establishes that drivers carry financial responsibility if they’re in an accident, however it’s not always a one-size-fits-all kind of deal. In fact, the exact policy requirements vary state by state.
Take Georgia, for example. Georgia requires all drivers to have a 25/50/25 minimum — meaning you must carry liability insurance that provides at least $25,000 for bodily injury per person, $50,000 for bodily injury per accident, and $25,000 for property damage per accident. North Carolina, on the other hand, requires drivers to carry higher limits of least $30,000 for bodily injury per person, $60,000 for bodily injury per accident, and $25,000 for property damage per accident (30/60/25 policy). Most insurance agents recommend drivers carry a 100/300/100 policy. For some, however, that isn’t always possible.
Drivers also must consider the overall cost of insurance as it relates to their personal financial situation. Due to various reasons, some drivers are labeled “high-risk,” meaning standard auto insurance becomes cost prohibitive. In these cases, minimum limits insurance (also known as non-standard auto insurance) becomes the best option. According to research by Verisk, an American data analytics and risk assessment firm, non-standard or minimum limits coverage makes up 20% of the premium for personal auto insurance in the United States.
If you need to buy a new auto insurance policy or you’re reevaluating your 2021 budget, ask yourself this question: Should I consider minimum limits auto insurance? Find out below.
1. If you only want the minimum liability insurance your state requires
If your personal preference for auto insurance is the bare minimum coverage, this is an option for you. Consult with a trusted auto insurance agent to figure out the best policy to fit your needs.
2. If you’ve been in multiple at-fault accidents
If you’re a driver who has been the at-fault party in multiple car accidents, it’s likely your standard auto insurance rate will be even higher, or you may have trouble actually getting a car insurance policy from a standard carrier.
3. If you’ve had many speeding tickets or moving violations
Like at-fault accidents, speeding tickets and moving violations (including DUIs, texting while driving, and running a stoplight or stop sign) can negatively affect how standard auto insurance companies view a driver. Once again, this will lead to increased costs or a difficult time when shopping for a standard policy.
4. If you have a foreign driver’s license or if there’s a gap in your insurance history
A driver can also be labeled “high risk” if they do not possess a United States driver’s license or if there have been gaps in their insurance history. In instances like these, it’s important to shop around for an insurance company that recognizes a foreign driver’s license as a legitimate credential for their policy or doesn’t factor in your insurance history.
5. If you have a bad credit history or your financial situation is strained
The most critical factors that will determine if you should carry a standard or minimum limits policy are financial: your credit history and ability to pay each month. If your credit score is on the lower end, you are more likely to be labeled as a higher risk driver and therefore will be subject to higher rates. Those with poor credit tend to pay significantly more for car insurance policies than drivers with good credit. Some companies do not check your credit, as they see it as a non-factor when offering auto insurance policies.
Those dealing with lower incomes or lack of income completely must determine where and when they can spend their dollars — and minimum limits auto insurance offers flexibility. The annual difference between paying for standard coverage versus required minimum coverage can vary significantly for policyholders. A trusted independent agent can help you make the right decision to best fit your needs.
If any of the above situations are relevant to you, then it may be time to seek out an insurance company that specializes in minimum limits auto coverage. Its agents and representatives can help you make the best choice when it comes to carriers and policies.
