Understand minimum state requirements for auto insurance

When looking at your state’s insurance requirements, you’ll likely come across numbers like 25/50/25. The first two numbers indicate the bodily injury liability limits and the third number indicates the property damage liability limits. To be clear, 25/50/25 indicates that each person injured in a car accident will receive a maximum of $25,000, but only $50,000 per accident is allowed. This means that if there are three individuals affected, and each needs $25,000, whoever files a claim first gains access to the $50,000 limit. As for the latter number, it says the total accident coverage for property damage is $25,000.

In the event of an accident, these required limits often cannot adequately cover all of your liability requirements and property damage. As such, although purchasing a policy that meets your state’s minimum requirements is all that is required to legally operate a vehicle in your state or avoid being penalized for not showing evidence of financial liability in the event of an accident, this is not always the best option. This is because doing so will translate into more of your expenses, and the possibility of imprisonment or prosecution if you cannot pay your obligations.

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