WEDNESDAY, DECEMBER 30, 2020
Is Full Coverage Auto Insurance Ever Legally Required?
Among the many terms surrounding auto insurance, full coverage is perhaps one of the most common. What many people don’t realize is that there is no single policy that is “full coverage.” Full coverage simply refers to the highest amount of auto insurance you can have on a single vehicle, which can vary per vehicle due to its value and insurance needs.
While full coverage auto insurance is recommended for most drivers, this insurance isn’t generally required by any state or federal law.
What Auto Insurance is Required?
Actual auto insurance requirements are decided by state legislation, meaning how much coverage you are required to have depends on where you live.
In Texas, all drivers must carry at least:
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$30,000 in bodily injury liability per person
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$60,000 in bodily injury liability per accident
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$25,000 in property damage liability
If you are caught driving without the minimum coverage required by your state, you could face various repercussions such as fines, license suspension, vehicle impoundment and more. Make sure to always have the minimum insurance required by your state.
When is Full Coverage Auto Insurance Required?
While state law doesn’t require full coverage, this doesn’t mean you will never be required to carry this coverage. In general, you may be required to carry full coverage by a dealership so long as you still have a loan on your vehicle. If you have not paid off your vehicle, you may be required to carry full coverage until you do.
When Can You Drop Full Coverage?
Dropping full coverage too soon can be disastrous, so it is important to take the option into careful consideration. If you have not paid off your vehicle and decide to drop your coverage, you could face repercussions from the dealership such as having your vehicle repossessed.
Rules are different if you’ve already paid off your vehicle, however. Once you no longer have the requirement from your dealership to carry full coverage, you may adjust your coverage as needed so long as you still have the state minimum requirements. Be careful changing your coverage, however. Full coverage is generally recommended because it offers the highest amount of protection on your vehicle. Lowering your coverage or cancelling certain areas of coverage means that you will have to pay for certain damages out of pocket after an accident.
Speak with an insurance agent before changing your car insurance policy.
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