Indiana Auto Insurance Requirements

The state of IndianaLike most states, Indiana requires liability insurance. Specifically, it requires the following amounts of liability insurance:

  • $25,000 of Bodily Injury Liability for one person
  • $50,000 of Bodily Injury Liability to cover all injuries sustained per accident
  • $10,000 of Property Damage Liability for property damage

In insurance lingo, this required coverage is abbreviated to 25-50-10

What exactly is Bodily Injury Liability and Why Am I Required to Buy It?

Bodily Injury Liability insurance goes into effect when you or a person covered on your policy causes an accident to another vehicle. If the other party sustains injuries from the accident, you are required to pay them back for their injuries through this insurance. That is, your coverage would go into paying the other party’s medical costs, at-home care, childcare, and even funeral costs. Moreover, the Property Damage component of liability insurance reimburses the other party for the repairs or replacement of their vehicle.

Indiana requires its drivers to have liability insurance because lacking this requirement would plunge the state in debt. Without insurance, people would have to pay for accident costs out-of-pocket, an outright impossibility for most people. Therefore, people who have been injured in car accidents would have few means to pay for their hospital expenses or lost wages. In addition, the accident rate for any U.S. state is high, with more people becoming seriously injured or dying from car crashes. As a result, Indiana’s economy would greatly suffer from having to assume this accident debt.

Therefore, motorists who purchase liability insurance are doing themselves a favor by avoiding dipping into their own savings to pay for accident costs. It may be a good idea to purchase as much coverage as possible without draining your finances or going beyond budget because when it comes to auto insurance, you really can’t protect yourself too much.

Does Indiana Recommend Any Other Types of Insurance?

All U.S. insurance agencies recommend purchasing a policy that includes not only liability insurance, but insurance that reimburses you for your own expenses following accidents. You can use this personal insurance regardless if you were at-fault or not at-fault for an accident.

Personal Injury Protection (PIP) is personal insurance that basically mimics liability insurance. That is, PIP finances your medical costs, lost wages, childcare, and other living expenses if you or your dependents sustained injuries following an accident. Purchasing $10,000 is a good starting point for PIP. However, keep in mind that $10,000 will not take you far if you sustain more critical injuries. In particular, surgeries and medical imaging tests rapidly drain $10,000 worth of money.

On that note, Collision Coverage and Comprehensive Coverage are equivalent to Property Damage Liability. Collision Coverage pays for the repairs or replacement of your car if it has been damaged by another vehicle in an accident. It also applies to damages caused by collisions with stationary objects, such as trees.

On the other hand, Comprehensive Coverage finances repairs to your car following damage from natural disasters. It also repays you for your car’s vandalism and theft. The latter risk is especially common with luxury vehicles, so it is a good idea for you to procure Comprehension Coverage if you own an expensive vehicle.

When considering Collision and Comprehensive Coverage, you should purchase as much insurance that lies within your comfort zone. For both types of coverage, it is important to be especially wary of deductibles. If you are financially strapped, you should purchase the highest deductible for both Collision and Comprehensive Coverage. Doing this will reduce your premium payments.

More insurance agents are also encouraging you to purchase Uninsured/Underinsured Motorist (UM/UIM) coverage. This coverage reimburses you for personal injuries and vehicular damage from an accident caused by an uninsured or underinsured motorist. In California, an uninsured motorist is a person who has no liability insurance, while an underinsured motorist is one whose insurance is too meager to pay for your medical bills and the like. For instance, if your car sustains $50,000 worth of damage, an underinsured motorist’s $10,000 worth of Property Damage Liability will pay for only a fifth of that sum.

Agents especially urge you to purchase UM/UIM because the amount of underinsured and uninsured motorists has spiked over recent years. Many illegal immigrants drive without insurance, as do reckless drivers. Reckless drivers, unfortunately, are the #1 at-fault parties in auto accidents. By purchasing UM/UIM, you can breathe easy that your personal finances are not at the mercy of these reckless drivers.

What Penalties Will I Receive If I Do Not Purchase Indiana’s Required Insurance?

Indiana is no exception to the financial responsibility law, which states that a motorist must present Proof of Insurance documentation if stopped by a police officer. Most insurance companies assign you cards that stand as your Proof of Insurance documentation. If you lack this card when stopped by an officer, you have to file a report to the Indiana BMV attesting you have auto insurance with a specific agency. The BMV then confirms with the insurance agency that you are a policyholder. If the agency denies you are a policyholder, the BMV will send you a Certificate of Compliance, which you will fill out with proof of your financial responsibility. Meaning, you will have to obtain the required liability insurance with an insurance agency.

If you fail to return this Certificate within 40 days, the BMV will suspend your license for 90 days. To regain it, you will have to purchase the required insurance by that time, and pay a reinstatement fee of $150. The penalties mount if you once again drive uninsured, in which case you will face another 90-day suspension period as well as a higher reinstatement fee of $225. Two more offenses and you will receive fines of $300 each. Moreover, if you receive two suspensions within three years, your license will be revoked.