Auto Insurance minimums are the amounts of insurance that are required by the state. By utilizing the bare minimum coverage you may save money on your monthly premiums, but is utilizing the bare minimum coverage really worth the savings?

The state of Arizona has mandatory insurance laws of liability coverage in the minimum amount of $15,000 bodily coverage for 1 person and $30,000 bodily coverage for 2 people. The state of Arizona also requires $10,000 property damage liability coverage. More details about the Arizona insurance requirements. These laws establish the bare minimum requirements that you must have when insuring your car, motorcycle, or golf cart. In general, the higher your coverage amounts the more expensive your insurance premium will be. If your insurance company potentially has to pay out $300,000 when you are involved in an accident instead of $10,000 you will pay typically pay a higher premium for that higher coverage amount.

Auto insurance minimums may not cover the cost of an accident. $10,000 is the minimum property damage liability coverage required. If you are responsible for an accident you may easily exceed this amount in property damage and be responsible for the remainder due. For instance, if you were to accidentally run a stop sign, side swipe another car and damage a city sign and sidewalk in the process, you could potentially be responsible for the damage to the other car and the city property. In the best case scenario, the insurance company would pay $10,000 towards these bills minus any required deductibles. If the damage to the other car costs $15,000 to repair and the stop sign and sidewalk cost $5000 to replace and repair for a total of $20,000 in damages, you could potentially be liable for $10,000 in damages which you would have to pay out of your own pocket.

Another scary scenario is using the same example but this time there are 4 people in the other car, each with medical injuries from the accident. If you are carrying the minimum insurance coverage you will only have insurance for up to $30,000 in bodily coverage. Medical bills can easily skyrocket beyond that amount and you would be responsible for the difference.

An increase in coverage doesn’t have to break the bank. If you are using the Arizona state auto insurance minimums because of budget restrictions call an experienced insurance agent. If you have a clean driving record or are a mature driver, an increase in coverage may not break the bank. You can also ask your agent to quote your policy with different companies to see if a better rate is available with increased coverage. Another option is to look at increasing your deductible to keep your premium low but get increased coverage amounts.

Bare minimums are better than nothing. If you are living paycheck to paycheck, have little to no assets, and are driving minimally, at the very least be sure to maintain the auto insurance minimums required by your state. If you are in an accident and your coverage is not enough, you can be held liable but something is better than nothing. If you do not meet the requirements of your state you can land in very serious trouble. You are required by law to maintain the insurance listed above. If you are pulled over and do not have insurance you can face suspension of your car registration and driver’s license for a minimum of three months. You can also have your license plates taken away. Once your suspension is over you may have to provide documents proving your financial responsibility and ability to pay for insurance before your license and registration will be reinstated. This is called SR-22 and it a document that verifies that you have auto insurance. If you are already having financial difficulties and find yourself pulled over without insurance you could create even more problems for yourself. If you have no driver’s license you will have a tougher time getting to work and you may face fines and fees to get your license reinstated. Be sure to have at least the bare minimum as stated by law when it comes to your auto insurance.

The state of Arizona has resources available when it comes to researching auto insurance. The mandatory insurance laws in Arizona are implemented for everyone’s protection and there are websites for your reference to help you understand and follow the law if you happen to commit insurance fraud, insurance companies has the ability detecting insurance fraud so you better think twice. The Arizona Department of Insurance’s gives the insurance minimums and explanations of the different types of insurance available. This site evens gives tips on how to reduce your premium including taking advantage of your insurance carrier’s discounts such as good driving or multiple policy discounts as well as increasing your deductible for a lower premium payment. It also gives a New Driver’s Guide to Auto Insurance and highlights the need for insurance, in particular for new drivers:

  • “The risk of an accident per mile driven among 16 to 19 year olds is four times the risk of older drivers.
  • Risk is highest at age 16, with the crash rate per mile driven almost three times as high as the risk among 18-19 year olds.
  • Car accidents are the number one cause of death among 16-19 year olds.”

This site also explains uninsured motorist insurance. Uninsured motorist insurance is available to protect you in case you are hit by someone who does not have insurance. Even though it is illegal, some people will run this risk.

While maintaining the minimum auto insurance coverage and having the accompanying lower premium may be tempting it is important to weigh the risk of being underinsured against the actual premium cost. There may be other cost effective alternatives that will not leave your bank account and assets exposed in the event of an accident. Are auto insurance minimums savings worth it? Work with an experienced agent to find the right amount of coverage for the right price. Don’t leave your financial health to chance.