Mandatory Auto Insurance Coverage

Before getting behind the wheel of any car, you should ensure you have at least the minimum insurance coverage mandated by the government. This minimum coverage varies by state, but the following four examples are the most common ones.

Liability Coverage

Liability coverage is mandatory in all states except New Hampshire. Liability coverage pays for the damages and injuries you may cause to others while driving. This is what ensures that you don't have to dig into your pocket to pay a pedestrian's medical costs when you accidentally knock them down on a foggy evening. It is also the same coverage that will come to your rescue when the owner of an exotic car sues you for scratching their custom paint when trying to parallel park next to their ride. Without liability coverage, your assets (such as money in your bank account or your vacation home) would be at risk each time you were held liable for an accident.

Personal Injury Protection

Personal injury protection, which many people know of as PIP, is also mandatory in some states. Unlike liability coverage which is mostly for other people, PIP is for you and your passengers; the coverage kicks in if you or your passengers are injured in an accident. One great thing about PIP is that it is valid irrespective of the cause of the accident. Although PIP is majorly concerned with medical bills, it may also pay other damages such as lost wages; it depends on your states and the specific policy you have.

Underinsured/Uninsured Motorist Coverage

Underinsured (UIM) ensures that you are not left out in the cold if another person causes your accident but their coverage limit is not enough to cover your losses. Uninsured motorist coverage comes to your rescue if you are struck by a driver without any car insurance coverage. UIM/UM is also mandatory coverage for drivers in a few states. Together, UIM and UM ensure that you are fully covered whether the motorist who caused the accident didn't have adequate coverage or had no coverage at all. This is the policy you will use to make a claim, for example, if you are injured by a hit and run driver.

Medical Payments Coverage

Some states also require drivers to carry medical payments coverage (MedPay). This coverage is more or less like PIP in that it pays for your medical expenses if you are injured in an accident. It also applies regardless of fault. The major difference between PIP and MedPay is that the latter is strictly for medical expenses, it doesn't extend to lost wages.

Talk to an insurance company for more information about personal auto insurance.