What Happens if You Don’t Have Enough Auto Insurance?

It can be tempting to go for the cheapest auto insurance policy to save on premium costs, but is it a good idea? Not really, unless you’re prepared to come up with thousands of dollars out of your own pocket if you’re in an accident.

When you’re responsible in an accident you are required to pay costs that exceed your policy’s liability limits, whether it’s for bodily injury or property damage. While that low $5,000 liability coverage comes with an enticing premium, if you’re in an accident you could face owing $10,000 in the event of an accident.

Auto repair costs, medical bills and property reconstruction or replacement can easily go far beyond low coverage. Whatever your state’s minimum limit for liability is, consider getting a higher limit, perhaps $25,000 or $30,000. It may cost more in premiums, but a lot less than you’d pay if you’re liable and only have minimal coverage.

If making higher premium payments, talk to your insurance provider about other ways to save money on your policy. See our article 10 Auto Insurance Discounts to Cut Your Car Insurance for tips on saving.

So, what happens if you have low liability coverage but don’t have the money to pay out of pocket costs beyond the minimum? If you don’t pay up, you can be taken to court. If you don’t pay the judgment amount, depending on the state you live in, you may have your license suspended, for a set time or indefinitely until you pay.

Another possibility needs to be considered as well. Your own car’s damage can add to your costs if you don’t have good collision coverage.

Not sure if you have enough coverage? Find out how much more you’d pay for better coverage by comparing policy quotes, and talk to the provider to see if there are other ways you can save on your policy without putting yourself in a bad situation with low liability coverage. Read more about what kinds of auto insurance you may need.