Recently, there has been a lot of talk about ‘auto insurance’ as if it were, well, a commodity. The assumption being that all Auto Insurance Policies are exactly the same.

Well they’re not.

And not only are the policies different, but even if we isolate a single policy to review, it’s still a hugely complex legal contract.

Seriously: have you ever actually read your auto policy?

Don’t worry if your answer is ‘no’. The fact is, very few people attempt to understand this legal document.

But you should be concerned if you’re just buying an off-the-shelf auto policy.


If you’re not reading the entire contract you’re signing (which is exactly what you’re doing when you complete an application for auto insurance – you’re entering into a contract), how can you possibly determine with any degree of confidence that the policy you’re purchasing is right for you? Or your family?

You have two choices:

  1. Take the time to thoroughly review the entire policy, including all terms, conditions, coverages, exclusions and endorsements so that you fully understand what you’re receiving for your investment
  2. Work with a knowledgeable, experienced insurance advisor that will take the time to understand your unique needs, and then structure a policy to fit your specific needs

Did you know: with the available coverages, terms, conditions, exclusions and endorsements that can be added to the standard auto policy, there are literally hundreds (if not thousands) of different combinations that can result in the final produce: YOUR auto insurance policy?

In the absence of #1 or #2 above, you’re buying a product with the hope that it meets your specific needs at the time of a claim.

That could be a huge gamble with your financial future in the event of a serious accident.

The Basics

There are several types of auto policies available depending on your specific needs:

  • If you’re a business that owns vehicles (other than an auto dealership or other auto service business), or allows employees to operate their own vehicles in the course of your business, the Commercial Auto Policy is for you
  • If you’re an auto dealership or other auto service business (such as an auto repair or service business), you’d likely need a specialized policy referred to as the Garage Form
  • And for those that are using their own personal vehicles, there’s the Personal Auto Policy – this is what we’ll devote the remainder of this article to addressing

What coverage is available?

Well, like nearly every other product you purchase, you have options. You can buy a lot of auto insurance, or a little.

Every state in the U.S. requires you to have some type of auto liability insurance, or be able to provide proof that you have the financial resources to compensate those you injure in an accident.

But they don’t require you to have much.

In states that have so-called mandatory auto insurance laws, all you’re required to buy is a small amount of liability coverage. This is so you can pay for some of the injuries you cause to others, or damage your car does to other property.

How much are you required to buy?

In most states with mandatory auto insurance laws, the minimum needed is liability that provides:

  • coverage for any person involved in an accident with you
  • a maximum amount of coverage for all persons injured in the accident, and
  • coverage for damage to the other vehicle(s) involved

Curious about the requirements in Ohio?

In 2015, for the first time in 44 years, the State of Ohio increased its required minimum limits of liability coverage.

The minimum coverage amount required per person injured is $25,000; it’s $50,000 for all persons injured, and $25,000 for damage to property of others caused by you. Prior to this change, the requirements were $12,500, $25,000 and $7,500, respectively.

That’s not much. In fact, it’s next to nothing.

Tip. The minimum amount of insurance required by most states is not much. Seriously consider getting higher limits in order to protect your financial future.

Note. You might have noticed that mandatory auto insurance laws do not require you to buy coverage for your own car. Or coverage for your injuries. Or coverage if you are hit by someone who doesn’t have insurance.

These types of coverage, commonly referred to as Collision, Comprehensive and Uninsured/Underinsured Motorists coverage, are available options with most auto policies. To learn more about the types of coverage available, see The 6 distinct coverages in the Auto Policy.

If you buy just the minimum coverage required by law, you are leaving your assets at considerable risk. Your car, obviously. And your home, your investments, even your future wages, if you are at fault in an accident that causes serious injuries to the other parties.

And how far do you think $25,000 will go if you total somebody’s Lexus? Not far enough!

If you’re feeling overwhelmed with the auto insurance policy options, and how to determine what’s right for you that’s also within your budget, fear not. This is where the advice and guidance of a licensed insurance advisor can help.

You should feel comfortable talking with your insurance advisor, asking the tough questions about whether the coverage you have is enough, or what other options you have to best protect your financial future. A good advisor will not only help you get the answers you need, but will welcome your questions and commitment to ensuring you have the coverage that’s right for you.

If you’d like to learn more, contact one of our Licensed Advisors . We’re here to help.