Whether it’s an ad with a general, a lizard or a catchy jingle, everyone says the same thing – “We’ll make you legal to drive.” But what does it really mean? And why should you care? We first begin by discussing what it means to be “legal to drive” in the state of Ohio (ie, state minimum car insurance) and then conclude with the top three reasons to avoid state minimum car insurance (this is why you should care).
What it means to be legal to drive in Ohio
The State of Ohio has a Financial Liability Act which states “No person may use, or permit the operation of, a motor vehicle in that State unless proof of financial liability is maintained continuously during the registration period in respect of that vehicle, or, in the case of a driver. who is not the owner, with respect to that driver̵7;s operation of the vehicle. ” For this discussion, a car insurance in Ohio meets this requirement.
So what does Ohio consider to be sufficient evidence of “financial responsibility?” Liability protection (bodily and property damage) within the following limits:
- $ 25,000 for bodily injury to one person
- $ 50,000 for bodily injury per accident
- $ 25,000 for property damage to someone else’s property
The above limits are also called the “state minimum limit for car insurance” or the “state minimum” for cards.
If you have not yet figured it out, these amounts, even if they are better than nothing, are still pretty awful. Keep reading why it is simply not enough and why you should avoid state minimum car insurance.
Reason # 1 to avoid state minimum car insurance
That word “border” is super important for this discussion. Because if you buy the limit shown above (abbreviated 25/50/25), that’s all you get. A border is a border. When it ends, the insurance company stops paying and YOU have to pay what is left. For real. And if you do not think you would ever reach this limit, here are some real examples …
- You have been involved in an accident with four vehicles (chain reactions are the most common). It’s your fault. Each vehicle was damaged and several passengers were injured. It is quite likely that your limit will end based on the severity of the injury and the damage. And again, these would mean that you have to spend for these processes.
- Do you know what type of vehicle you should drive? Nobody does. So if you plow into a semi-truck, or even just an expensive pickup (some can easily cost $ 80,000), you do not have enough coverage to pay for the damage. Do you have an extra $ 30,000, $ 40,000 or whatever ends up sitting around? I do not know many who do (I certainly do not).
- And what about the injuries that people experience? A death is certainly the worst case scenario, but what about the situations where the injured party has lifelong injuries that affect his ability to earn an income? Or just cope with everyday tasks?
Everything I have just described I have seen happen. No catastrophic accident is required to reach the border. And when that limit is used up, the insurance company has exhausted its obligation. It is up to you to pay any remaining amount for damages and property damage.
And if we solve it, we’re going to recital # 2 …
Reason # 2 to avoid state minimum car insurance
So when the insurance limit is gone, you personally have to pay out of pocket. How are you going to get that money?
- Sell your property
- Sell vehicles
- Cash in pension plans
- Empty bank accounts
- Sell personal belongings
None of these solutions are good, but they may be necessary to pay off the debt you owe. Not only do you have to deal with the aftermath of a car accident, but now you are worried about getting the money to pay the remaining amount. And this would suck on an epic scale. A higher liability limit on your car insurance would aim to reduce the need to do any of the above.
Reason # 3 to avoid state minimum car insurance
So many younger people might say, “I just started and have nothing for anyone to take. So when the limit goes out, well.”
I ask them, “What if this affected your ability to earn an income in the future?”
After a few puzzled glances, I explain that the state of Ohio allows wage garnishment, which means that a fixed amount can be deducted per paycheck, to pay the amount still owed. This gives you less per paycheck for things like your regular bills, food, etc.
How much smaller? Ohio generally complies with federal laws governing foreclosure. The law states: “For ordinary decorations (ie, those not intended for support, bankruptcy or any state or federal tax), the weekly amount may not exceed the lower of two figures: 25% of the employee’s disposable income, or the amount by which an employee’s disposable income is greater than 30 times the federal minimum wage. For complete information, the Department of Labor has published a practical fact sheet, The Federal Wage Garnishment Law, Consumer Credit Protections Act’s Title III, from which this information was taken.
I could not find the maximum length of time that decoration is allowed, but even if it is only a few years, it is a big deal. It gives you less money to live on every paycheck, and potentially for a long time.
The lesson here?
Buy as much liability insurance as you can afford. It is much cheaper to pay the premium for higher than the state minimum limit than to pay for the remainder of a claim once your insurance has expired (and over time too!)