,Why Illinois drivers need to update their insurance policies soon

Why Illinois drivers need to update their insurance policies soon

With only a few weeks to go in 2014, a number of Americans are preparing to renew their auto insurance policies that expire at the end of December. But in Illinois, virtually all motorists will need to update their coverage policies as a new regulation goes into effect.

Last year, the Illinois legislature passed and signed into law a bill that increases the minimum amount of liability coverage drivers are required to have in order to be registered to drive in the state. Noted by the Secretary of State’s office, the minimum mandatory limit as of Jan. 1 will increase for virtually everyone, perhaps by as much as $10,000, depending on the policy and how much minimum coverage motorists already have.

“As of Jan. 1, Illinois drivers are required to have $25,000 worth of minimum liability auto insurance.”

The liability portion of auto insurance coverage is the money that goes to another driver who may have been injured in an accident. The new minimum amount is $25,000 to pay for medical treatments of an injured person, up from $20,000. It also raises the minimum amount for the injury or death of two people to $50,000 from $40,000.

Rep. Laura Fine of Glenview told the Chicago Tribune last year that raising the minimum level of liability was sorely needed, having not been adjusted in more than two decades.

“These rates have not been changed in 24 years and do not keep pace with rising medical costs,” said Fine. “This will save people who are injured in an accident that is no fault of their own from some of the out-of-pocket medical costs they may incur.”

Fine added at the time that she’d been affected personally by insufficient insurance minimums, after her husband was involved in an accident. Because the person at fault for the accident had liability coverage that was insufficient for the type of treatment her husband needed, their medical expenses were “astronomical.”

“Had the minimum been higher than the required $20,000, it would have saved us some of the out-of-pocket costs,” said Fine.

New Hampshire is the only state in the country that does not mandate auto insurance. 

Minimums vary state to state

The minimum amount of liability coverage that drivers are required to have varies by state. In Alaska, for example, minimums average $58,000 per coverage type, making it the state with the highest amount mandated by the law in the U.S. California, Florida, New Jersey, Pennsylvania, Arizona, Delaware, and Massachusetts are among the 10 states where minimums are at or below $25,000, the new required amount of liability Illinois auto insurance coverage.

Auto insurance is required by law in 49 of the 50 states, including Washington, D.C. The only state where auto insurance is not mandated is in New Hampshire. However, the state does require that drivers be able to show that they have the financial means in which to purchase coverage if they’re responsible for a crash. Additionally, after their first accident, New Hampshire drivers are obligated to secure coverage.

Approximately 12.6 percent of drivers in the U.S. today are uninsured, down from 15 percent in 2003, according to data from the Insurance Research Council. Illinois motorists should be sure to update their policies sooner rather than later so that they’re in compliance with the new mandate and aren’t underinsured.