The Drawbacks of Cheap Car Insurance

On average 13% of our nation’s drivers are uninsured. Many states are looking for ways to limit the economic fallout. Some are testing bare-bones auto insurance policies, which can cut premiums by as much as 50%. They reason that it is better for drivers to have some kind of car insurance than none at all.

That sounds good on the surface, but opponents fear that people who are injured by drivers with bare-bones coverage will quickly exhaust the policy limits. They say that existing minimum requirements in most states are already inadequate. Lowering the requirements for some will only mean more lawsuits or more seriously injured people draining state Medicaid coffers.

So, is minimum car insurance enough? Probably not. Here are three reason why:

• Every state sets its own minimum auto insurance requirements. These range from a low of $15,000 per person and $30,000 per accident for bodily injury and $5,000 for property damage (commonly expressed as 15/30/5) to a high of $50,000, $100,000 and $25,000, respectively. As the policy holder, if damages exceed those minimums, you’re on the hook for the difference. And really, how far will 5 grand go toward repairing that Lexus you rear-ended?


• If an accident happens and you’re at fault, you could find yourself on the wrong end of a lawsuit. While your minimum coverage may pay for a legal dispute, it will only do so up to the limit of your coverage.


• Since you generally get what you pay for, you’re better off shopping online for the best price on the amount of coverage that will protect you. You’ll get competitive quotes for car insurance from top-rated companies and peace of mind in the bargain.