1. Minimum Liability Coverage

What it is: Liability insurance covers damage or injuries you may cause to others in an accident. It typically includes bodily injury liability and property damage liability.

Why it’s required: Most regions mandate minimum liability coverage to ensure that drivers can cover damages to others, preventing financial hardship for victims in accidents.

Example: In some states, the minimum liability coverage is set at $25,000 per person and $50,000 per accident for bodily injury.

2. Uninsured/Underinsured Motorist Coverage

What it is: This type of insurance protects you if you’re in an accident with a driver who either doesn’t have insurance or lacks enough coverage to pay for your damages.

Why it’s required: Some states require this coverage to ensure that drivers are protected, even if the at-fault driver is uninsured.

Example: States like Illinois and New York require uninsured motorist coverage as part of their auto insurance requirements.

3. Personal Injury Protection (PIP)

What it is: PIP covers medical expenses, and in some cases, lost wages and other costs associated with injuries from an accident, regardless of fault.

Why it’s required: Required in “no-fault” states, PIP ensures that your insurance can cover immediate medical needs, even if fault hasn’t been determined.

Example: Florida and Michigan require PIP coverage, as they operate under no-fault laws.

4. Medical Payments Coverage (MedPay)

What it is: Similar to PIP, MedPay covers medical bills for you and your passengers after an accident, regardless of fault.

Why it’s required: Although not required everywhere, MedPay is a common requirement in states without PIP and can act as an alternative.

Example: States like Maine and New Hampshire mandate a minimum amount of MedPay coverage.

5. Collision and Comprehensive Coverage

What it is: Collision covers damages to your vehicle from a collision, while comprehensive covers non-collision incidents, like theft or natural disasters.

Why it’s required: Typically optional but often required if you have a car loan, collision and comprehensive provide financial protection for your vehicle.

Example: Leasing companies usually require this coverage for the protection of their asset.

Conclusion

Knowing your state or region’s auto insurance requirements can help you avoid penalties and ensure you have the necessary protection. Meeting these requirements doesn’t just comply with the law—it’s also a critical step in protecting your financial well-being on the road.