We recently published a blog post about compulsory insurance coverage, and got some great feedback and the recommendation that we better spell out the risks associated with opting for minimal insurance coverage. Well, here we go…
Here is the big question: “If compulsory is all that’s required for my car, why should I spend more? Doesn’t my state government know what’s best?”
I can’t say whether or not your particular state government knows what’s best, but I can say that some states may not even require auto insurance. New Hampshire, for example, did not legally require auto insurance for its drivers when I lived in the state next door, and it was a mess whenever an uninsured driver from that state visited mine and had an accident (because, of course, the driver is still financially responsible).
My point here is that some states have very different views on auto insurance requirements than others. Laws can be complicated, and some date back so far that they no longer make sense to many people. So with all this said, I always opt for good insurance over minimal.
Another question worth mentioning was “I am in the same business as my friend in another state, but she pays only 80% of what I pay for business insurance. Why do I have to pay more?”
Without knowing the two states in question I cannot answer this question with great specifics – but I can tell you that you the policies could be very different with regard to coverage. While your friend is saving some money each month, you need to ask yourself what is he or she getting for that savings. If his/her business had a problem – and you had the same one – who would be better protected and is that worth the price of the added monthly cost?