5 Types of Auto Insurance Required by Law

December 12, 2022

When it’s time to purchase auto insurance, with all the various coverage formulas available, it can be both confusing and challenging to find the best kind of auto insurance coverage for your specific needs. Some insurance coverage may be required by state laws while other kinds of coverage will be optional.



Undoubtedly, the more coverage you have, the more you’ll be protected, but you’ll pay higher premiums. Before deciding, it’s important to have a basic understanding of what you need and what is available.

What Kinds of Auto Insurance Are Required by Law?

All states will require drivers to assume financial responsibility when they are behind the wheel. Auto insurance is the most common method of assuming financial responsibility even if it will have limits. Different types of auto insurance coverage are obligatory before cars can be registered or driven.

Liability Insurance Coverage

Liability coverage is necessary to protect drivers, passengers, third parties, or pedestrians that suffer injury or damages through the fault of someone else. This type of coverage is required to safeguard victims from having to pay for medical care or repairs themselves when the damage is caused by others.


A majority of states will require drivers to purchase this type of auto insurance, although a few states may forgo the requirement if the driver can demonstrate that they have sufficient personal resources to pay for any type of damage if they are involved in an accident.


Liability insurance for bodily injury protects from injuries to any people involved in the accident whether passengers, pedestrians, or drivers. Liability property insurance will cover damages to property such as another vehicle involved in the accident or to property damaged with the vehicle, such as trailers, because of the accident.

Minimum Coverage Limits

Individual states will have minimum requirements for both bodily injury and property damage coverage. Depending on the state the car is insured in the minimum coverage required for property damage may range from $5000 such as in California to $25000 required by Texas. So, it’s important to know your state’s mandatory minimum.


Bodily injury coverage may be a bit more complicated because there may be more people in a vehicle at the time of an accident. States will require coverage “per person” or “per accident” to protect multiple victims in vehicles. The minimum coverage “per person” will vary from $15,000 to as much as $50,000 depending on the state while “per accident” coverage will generally fall in the $30,000 to $100,000 range.


Drivers that are at fault for accidents can be personally responsible for any damages beyond what their insurance policy covers. So, those with considerable personal assets may want to increase their coverage limits to prevent being liable for higher costs.

Other Required Insurance Coverage

While not mandatory in all states, there are several states that want coverage that goes beyond basic liability. This extended coverage is generally available in other states as an option at a higher cost.

UM Insurance Coverage: Insurance for Uninsured or Underinsured Motorists

Even if liability insurance coverage is mandatory, there are always people that do not get it or their insurance is minimal and will not cover the total expenses due to bodily harm and medical costs or property damages resulting from an accident.


While a driver found to be at fault for an accident is personally liable for harm inflicted, he or she may not have sufficient personal assets to pay all the expenses. If you possess UM coverage, your insurance provider will cover the costs beyond whatever limits the at-fault driver’s insurance policy has. UM insurance coverage is divided into UMPD (uninsured motorist property damage) and UMBI (uninsured motorist bodily injury) coverage.


There are more than 20 U.S. states that require UM insurance coverage.

PIP – Personal Injury Protection

Personal injury protection coverage will cover medical costs. Some policies may even cover other costs of passengers and drivers despite who is at fault for an accident. Other costs might include lost wages and income, household services like house cleaning, yard work or childcare following an accident, and death benefits.


A few states have made PIP insurance coverage obligatory in an attempt to curtail lawsuits that follow accidents. 12 U.S. states require PIP insurance coverage as of December 2012.

What Auto Insurance Coverage Isn’t Mandatory?

States do not require motorists to procure either comprehensive coverage or collision coverage. Nonetheless, for those car owners that can afford it, these policies may well be worth the extra costs. If the budget is tight, you can look into other ways to reduce car expenses.


The required types of insurance coverage will not reimburse your expenses for damage to your auto if you cause it or due to some cause other than an accident such as bad weather. Undoubtedly, comprehensive and/or collision damage will increase your premiums perhaps even doubling them, but you receive reimbursement for damages outside what minimum mandatory auto insurance provides.


If you have purchased a new car, the greater expense of comprehensive coverage may be in your best interests.






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