OAI: Auto Insurance Co.'s Business-Model Change Underscores Minimum Coverage Issue

An Ohio-based insurer's recently announced move toward giving customers greater options when it comes to auto insurance protections underscores the need for drivers to consider whether a policy will provide enough coverage after a serious accident, according to OnlineAutoInsurance.com.

The company, Safe Auto, has specialized in selling consumers the least amount of protection required by state law. But the insurer announced this week it has begun offering customers more than just the bare minimum.

Consumers going to generate car insurance quotes online should understand how their state's minimum requirements compare with those of other states and whether they should go beyond them.

Just how much coverage motorists should be required to carry is the subject of ongoing debate across the country. Almost every state requires that motorists have some coverage, but minimum standards vary widely between states.

For example, Michigan drivers must carry personal injury protection coverage that requires insurers to provide unlimited medical benefits to the policyholder and up to $1 million in property damages that he or she causes, which is part of the reason the state has among the highest premiums nationwide, according to the Insurance Information Institute (III).

By contrast, a legal minimum-limit policy in California and Pennsylvania provide for a total of only $30,000 in bodily injury liability protection per accident and only $5,000 for property damage liability per accident.

Source: http://www.insurance.ca.gov/0400-news/0100-press-releases/2010/release130-10.cfm

Those amounts could easily be exceeded in a serious accident.

Beyond legal requirements, deciding on the right level of coverage often comes down to concerns about finances and how much protection is needed.

Out-of-pocket costs are one major consideration. According to III, accidents often cost more than the minimum state limits, and policyholders who are found legally responsible for repair bills higher than they are covered for by their policies will be on the hook for the difference.

III advises consumers to consider purchasing higher liability limits or an umbrella or excess liability policy, which pays when your underlying coverage is exhausted. Motorists should also think about collision and comprehensive coverage that pays the cost of repairs, theft and weather damage to their own vehicles.

Safe Auto introduced higher limits earlier this year and plans to expand the offerings to other states through next year. The company sells policies directly to consumers in Ohio, Pennsylvania and 14 other states.

To read more about this and other financial responsibility issues, go to http://www.onlineautoinsurance.com/quotes/ where you will find informative resource pages and a free-to-use quote-comparison generator that consumers can use to get sample premiums for many vehicle makes and models.