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Louisiana Liability Coverage Requirements Increase

In the state of Louisiana, new car insurance laws took effect at the turn of the new year, resulting in higher minimum auto insurance requirements for state motorists. The new requirements, dealing with auto liability coverage, were a part of a package of legislation passed which went into effect on Jan. 1, 2010. In Louisiana, auto liability insurance is required for every motorist. The new requirements increase the minimum acceptable levels of auto liability insurance for car owners in the state.

New Law Increases Liability Minimums

In the state of Louisiana prior to the enactment of this legislation, motorists had to have auto liability coverage at a minimum level of 10/20/10. The three numbers represent the minimum coverage requirements for each of the three portions of a Louisiana split form auto liability policy, expressed in thousands of dollars. The first two numbers are for bodily injury coverage, and the third is for property damage. With the new law taking effect on Jan. 1, those numbers went up to 15/30/25. The increase was the first in the state of Louisiana in several decades, and was aimed to bring minimum levels of liability coverage more in line with modern-day collision costs.

The minimum liability coverage hike will have quite an effect on the state population. According to experts in the field, there are approximately 2.5 million vehicles registered in the state of Louisiana, and out of that number, close to a million of them are only covered by the bare-minimum state mandated auto liability coverage [1]. Significant auto insurance rate increases are expected across the board for anyone whose level of coverage will be affected by this increase, although the precise amount of that increase remains to be seen, and estimates vary widely.

Auto Liability Insurance Coverage Basics

The split form auto liability policy has three portions, as stated previously. The first two parts are set aside for bodily injury. They are themselves split: the first part for injury to the driver or first injured victim, and the second for cases of multiple injuries present as a result of an accident. The first injury coverage required in Louisiana went up from $10,000 to $15,000, while the per accident bodily injury minimum increased from $20,000 to $30,000. Both represent significant (50 percent) increases, and will certainly beef up the liability coverage of those Louisiana drivers affected by the hikes. The only concern is whether this increase and the resulting raises in premiums will cause a backlash in the form of increased rates of uninsured motorists who choose to or are forced to forego legal insurance due to rising prices.

The third portion of a Louisiana auto liability policy is the property damage liability portion. The state minimum level of coverage for property damage liability went up from $10,000 to $25,000 as a result of the auto insurance legislation. This increase is obviously even more significant than the raises in bodily injury liability limits; but clearly the increase was justifiable given the fact that even the new limit may not be enough to pay off a new car or truck totaled in an accident.

Every liability policy serves to protect the insured policy holder from personal financial responsibility in the event of an at-fault auto accident. Its intent is to shield drivers from the legal obligation to pay out of pocket for expenses related to such accidents. Auto liability coverage is not designed to provide any kind of protection for the covered driver to defray the cost of dealing with his or her injuries or loss of property to the covered vehicle in liability accident situations. For this kind of protection, a car insurance policy has to add additional means of coverage to a Louisiana auto policy.

The state of Louisiana operates on a tort system as it pertains to auto accidents and the determination of fault in such accident situations. In a tort system, investigators such as law enforcement officials on the scene of a car accident are obligated to make a ruling on fault. They must assign blame for every car accident. In addition, the full obligation to pay for damages in a tort auto insurance system such as Louisiana's rests with the driver found liable, and by extension, the liable driver's auto insurance carrier.

Minimums May Not be Sufficient

In keeping up with their end of this tort arrangement, in many cases liable drivers find that the state mandated minimum level of auto liability insurance is not sufficient to cover all the financial costs of dealing with the accident, even while it only addresses the costs borne to the other vehicle and driver. This will still be true even as the new minimums have taken effect. As it was previously noted, many cars today are worth more money than the state-mandated level of property damage coverage. Insurers are only obligated to pay out the level of coverage contained in their clients' policies. Certainly the cost of medical care can far exceed those limits required by the new state law. The increases will help to reduce the frequency of accident situations in which the extant insurance is insufficient, but they will not eliminate this occurrence altogether.

What's more, they will not do anything more to protect insured Louisiana drivers from the danger of being involved in auto collisions with uninsured motorists. And the risk of seeing costs above and beyond the limits of the liable driver's policy will still be there. For this reason, although they are not required by state law to do so, Louisiana drivers are nonetheless strongly encouraged to add uninsured and underinsured motorist protection to their auto coverage plans at the very least. Uninsured and underinsured protection gives the covered policy holder another way to meet the expenses of an accident caused by the other driver in situations where the other driver is at fault and his or her liability coverage is insufficient to cover these costs (or that driver has no insurance at all).

Uninsured motorist coverage is divided into bodily injury and (if applicable) personal property coverage. It only goes to work for the covered policy holder in situations where fault can be determined, and that fault rests with the other driver, but the other driver carries no liability coverage. Since Louisiana is a tort state, there is no issue with collisions in which no fault is determined. However, this coverage is only applied when the other driver has no liability coverage at all. For cases where the other driver has liability insurance but that insurance does not cover all your costs, your underinsured motorist coverage would pay out for excess expenses up to the limits of coverage, minus your deductible.

There are obviously other optional areas of coverage Louisiana drivers are well-advised to explore when it comes time to nail down the specifics of their auto insurance plans. But a solid liability policy supplemented by uninsured and underinsured motorist protection at least ensures that the covered policy holder will be protected in all liability instances. It is recommended that all Louisiana drivers carry both an adequate level of liability coverage, and uninsured and underinsured motorist protection.

[1] Retrieved 2010-01-10.



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