Illinois Car Insurance
Illinois may be nicknamed "The Prairie State," but with more than 10.4 million registered vehicles and a vast 2,185-mile interstate system, that nickname might be a little outdated.
If you're one of the more than 3.9 million drivers in the state, it's important to learn the rules of the road and your legal obligations as a driver. Not only must you follow the speed limit and make safety a first priority, you're also required by law to purchase and maintain auto insurance.
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Here's your consumer guide to auto insurance in Illinois.
Why is auto insurance mandatory in Illinois?
You have a choice when it comes to buying a majority of insurance products. In most cases, you choose to buy a renter's, condo, disability, or life insurance policy. While you still have choices when it comes to building an auto insurance policy, it's something that you must carry no matter how you feel about it.
The mandatory insurance law in Illinois is a consumer protection measure. Instead of giving consumers the choice to drive unprotected, state officials have made insurance a requirement to ensure everyone has at least some financial protection. The requirement protects other consumers if you cause them to suffer damages.
How much third-party coverage do you need?
Coverage that pays for someone else's damages is referred to as third-party liability coverage. It's the most popular type of coverage required under state law if you live in a state following a tort system structure.
Since Illinois is a tort state, third-party liability coverage is something that you must buy to protect your financial assets and to prove your financial responsibility.
Third-party coverage consists of two different coverage options that pay for different types of damages. Bodily injury coverage (BI) pays for medical bills and rehabilitation treatment to the occupants in the other cars. Property damage (PD) pays to repair damage to property.
Here are the minimum required limits:
- Bodily Injury: $25,000 per person/$50,000 per accident
- Property Damage: $20,000 per accident
Are higher limits available?
The minimum required limits in Illinois are fairly high compared to requirements in other states. Even so, they are low when you're considering how much damage you can do in the blink of an eye behind the wheel of a car.
If you're concerned with protecting your assets and your income, you may want to consider selecting higher liability limits.
Are there any first-party coverage requirements in Illinois?
A majority of states don't enforce any type of first-party coverage requirement. In Illinois, however, you're required to carry uninsured motorist protection (UM). Even though the coverage comes at a cost, it's one that you'll appreciate having if you ever need to use it.
What does Uninsured Motorist Protection pay for?
Uninsured motorist bodily injury coverage is designed to pay for your medical bills, transport costs, rehabilitation expenses, and even pain and suffering.
It acts like third-party liability coverage when you're hit by an at-fault driver with no insurance. It also pays the difference if someone doesn't have enough insurance to cover the entire loss.
How much UM must you carry?
Currently, the requirement for UM matches the requirement for third-party bodily injury coverage. You can carry no less than $25,000 per person and up to $50,000 per accident in the state when buying a basic policy.
However, you do have the option to raise your limits up to the limit of bodily injury liability that you carry.
Do you need higher limits for uninsured motorist coverage?
You have the option to reject higher limits, but it might be in your interest to pay the extra premiums for more protection. Based on the latest statistics released by the Insurance Research Council, about 13.3 percent of drivers in Illinois don't have insurance. In terms of the highest percentage of uninsured drivers, Illinois ranks 20th in the nation.
The ranking might not sound too bad, but if you do the math you'll see why UM is so important. Since there are around 8 million registered drivers in the state, around 1 million drivers are uninsured on the road at any given time.
Because your odds of getting hit by an uninsured driver are high, raising your limits is strongly recommended.
Do you need physical damage coverage for your car?
Property damage pays for third-party repairs and physical damage pays for your own repairs. While you can get your vehicle repairs in a no-fault loss without any physical damage coverage, it's something that you need when you're at-fault or when there's a loss that doesn't involve a collision.
State law doesn't require you to buy physical damage protection. Even though you're not at risk for receiving a misdemeanor for rejecting it, you could violate your lending agreement if you don't have full coverage on a vehicle that's financed. Avoid the temptation to save money and buy the coverage that you need.
What does physical damage coverage pay for?
Physical damage coverage pays up to the actual cash value (ACV) of the covered vehicle to repair or replace it after a covered loss. It consists of comprehensive and collision coverage, each of which cover the vehicle for damage caused by different types of perils.
Each coverage will pay for the following perils:
- Comprehensive – fire, theft, vandalism, missiles, falling objects, flood, glass breakage, animal claims
- Collision – collision with another object or vehicle rollovers
What happens if you don't buy comprehensive and collision?
If you're under contract to buy comprehensive and collision, several things can happen if you don't comply. The most serious would be that your car is repossessed and the contract is voided. A more common scenario would be that the lender force-places insurance on your loan at an expensive cost.
There are also consequences for failing to buy physical damage insurance for a car that you own. The most severe consequence is that you must pay for the repairs on your own with no help from an insurer. If you don't have an extra car or you don't have the money to replace the car, the loss could be devastating.
How do I know if full coverage is worth buying?
There are times where it doesn't make much sense to buy full coverage. If you have a spotty record or a luxury car, the cost for coverage could be astronomical. You should consider the cost of the premiums and the fair market value of your car to make an educated decision.
Most experts will recommend that you remove full coverage from your car when the vehicle's value is worth less than 10 times the amount of money that you're paying for full coverage per year. The value will be the value of the car in the eyes of the insurer, which is often lower than you would expect.
How is your car valued?
Illinois insurers never want to pay more money than your car is worth when settling a claim. Because of this, they use various sales reports and other records to calculate the car's diminished value. Actual cash value (ACV) valuation methods are standard in the auto insurance industry.
Some of the common sources adjusters will use are as follows:
- Kelley Blue Book guides
- Dealer sales reports
- Dealer sales listings
- Private party sales
- Repair bills and aftermarket sales bills
How do you choose the best insurer in Illinois?
Illinois is home to hundreds of property and casualty insurers. With this being said, not all of the insurers have great reputations.
When you buy insurance, you want the company you pay to give you a fair settlement in a reasonable amount of time, which is why you need to research companies before you buy from them.
Here are some factors to consider:
- Check the company's financial standing through consumer agencies like A.M. Best.
- Check the company's licensing status through the Department of Insurance in Illinois.
- Review consumer ratings through reliable sites like J.D. Power and Associates.
- Check for regular complaints through the National Association of Insurance Commissioners.
- Review the insurance products sold by the company.
It is essential that you consider prices but that is something that is best saved for last. When you have a list of reliable carriers you can easily sift through the list by retrieving quotes. One of the most effective ways to search for the best rates instantly is to use an online rate comparison tool.
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