Auto insurance quotes and the mandatory state requirements

Fault and no-fault

There’s a difference in the approach between the states. The majority rely on the law of tort. Under the test of negligence, the driver at fault is responsible for paying out damages to anyone else injured in the accident. In those states, the law is therefore that all drivers must carry a minimum amount of liability insurance to pay for vehicle repairs and medical treatment. This is usually shown as three sets of numbers, e.g. 25/50/25. The first shows the amount payable to cover the treatment of one person injured. The second shows the total amount available to cover all medical treatment. The third is the amount available to cover damage to property.

As should be obvious, these minimum amounts are not adequate to cover the likely cost of medical treatment or vehicle repairs. Most states set these minimum figures decades ago and have never increased them in line with inflation. Thus, unless you are poor with no assets to protect, it’s always worth buying more than the minimum.

In the twelve no-fault states, you are insuring yourself, but the same approach to insurance minimums applies. In the event of an accident, you claim for your own losses no matter which driver was to blame. This is a more efficient approach in eliminating disputes that need to be resolved in courts. Unfortunately, these states have attracted a higher level of fraud and so the saving in premiums have not been passed on to policyholders.

Medical expenses

Fourteen states have mandatory personal injury protection. This is not the same as the mandatory health insurance introduced by President Obama where the constitutional position remains unclear. This mandate does not apply to every citizen. It only applies to people who choose to drive so it is considered constitutional. Think of it as an extension to the no-fault approach in that it covers your own medical expenses and, in some states, your loss of wages and some element of compensation for the pain and suffering. This type of cover is slightly different in that, even in no-fault states, the insurers are allowed to take each other to court to dispute which company should be responsible for picking up the final bill. With the cost of medical treatment rising so fast, it can often be economical for there to be court cases. This does not delay the payment of money to the policyholders, but it can require the drivers to appear in court some time later.