Get answers to your questions about car insurance in the Hoosier State
Auto insurance is a financial safety net. The idea is that by paying a relatively small premium every month, you’ll be protected from financial disaster if misfortune strikes and you cause or are involved in a serious accident.
For that reason, having auto insurance should reduce some of the anxiety associated with driving. But insurance doesn’t reduce anxiety if you don’t know how it works, how much you need, or what happens when someone who doesn’t have insurance causes your accident.
With that in mind, let’s take a look at auto insurance laws in Indiana, including whether liability insurance is mandatory and what happens if an uninsured driver causes a car accident.
Fault-based insurance system
Most states have either a no-fault or fault-based insurance system that determines how insurance claims are handled:
- No-fault insurance system. In states with no-fault insurance systems, all drivers who are involved in an accident—regardless of who’s at fault—turn to their own insurance policies to cover the damages.
- Fault-based insurance system. In states with a fault-based insurance system, the person responsible for causing a car accident is responsible for paying the damages.
Indiana has a fault-based insurance system. This means that when another driver causes your accident, you can:
- File an insurance claim with the at-fault driver’s insurance (this is called a “third-party insurance claim”),
- File a claim with your own insurance company (your insurance company will then pursue reimbursement from the at-fault driver’s insurance company), or
- File a personal injury lawsuit against the at-fault driver (assuming there’s coverage, the at-fault driver’s insurance company will step in and represent the at-fault driver).
Mandatory auto liability insurance in Indiana
All motorists in Indiana are required to maintain the state’s minimum amount of liability insurance coverage:
- $25,000 for bodily injury for the death of 1 person
- $50,000 for bodily injury for the death of 2 or more people in any one accident
- $25,000 for damage for the destruction of property in one accident
You might hear your insurance agent refer to this coverage as “25/50/25 coverage.” There are two important things to keep in mind with respect to this coverage:
- Liability insurance covers bodily injuries and property damage caused by the insured individual and sustained by someone other than the insured individual.
- This is the minimum amount of coverage required (you always have the option to purchase additional coverage).
Penalties for driving uninsured in Indiana
If you’re caught driving without the minimum auto insurance required in Indiana, you’ll have to pay a fee and your license could be suspended for up to one year.
However, the more significant risk of driving without insurance is that you’ll be personally liable for any damages that you cause. This means the injured driver can sue you and, if you don’t have the money to pay the judgment, go after your home and other assets.
What happens if the other driver is uninsured?
Although liability insurance is mandatory in Indiana, unfortunately not everyone follows the law.
So what happens if you’re involved in an accident and the at-fault driver doesn’t have insurance?
Fortunately, Indiana requires that every auto insurance policy include uninsured motorist coverage and underinsured motorist coverage (so long as you don’t reject the coverage in writing).
- Uninsured motorist (UM) coverage provides coverage for bodily injury ($25,000 for one person, $50,000 for two or more people in one accident) and property damage ($25,000) in the event that the at-fault driver doesn’t have insurance.
- Underinsured motorist (UIM) coverage provides coverage for bodily injury ($50,000 for one person) in the event that the at-fault driver doesn’t have enough insurance to cover the damages.
Let’s consider 2 examples:
Example #1
You’re stopped at a red light in downtown Indianapolis when the driver behind you crashes into the back of your vehicle. You suffer mild whiplash resulting in $10,000 worth of medical bills. Additionally, it costs you $3,500 to repair your bumper. Although you have auto insurance, the driver who hit you does not.
Under the UM coverage automatically included in your auto insurance policy, your insurance company should cover your $10,000 injury claim and your $3,500 property damage claim.
Example #2
You’re driving in South Bend when a college student runs a red light and crashes into the side of your vehicle. You suffer a serious back injury resulting in $250,000 worth of medical bills. Your car, which is valued at $25,000, is completely totaled. The college student has the minimum auto insurance required.
Because the college student only has the minimum amount of liability insurance required ($25,000 in bodily injury and $25,000 in property damage), their insurance will cover all of your property damage but will only cover $25,000 of your injury claim (leaving you $225,000 short).
Under the UIM coverage automatically included in your auto insurance policy, your insurance company will cover an additional $50,000. Though this is better than nothing, you’ll still be short $175,000. You can attempt to recover the remaining $175,000 by filing a personal injury lawsuit against the at-fault driver.
Indiana insurance FAQs
We’ve covered the basics, but now let’s take a look at a few more questions you may have about auto insurance rules in Indiana:
How much does auto insurance cost?
The Indiana Department of Insurance permits insurance companies to set their own rates so long as the rates are “fair, adequate, and not excessive or unfairly discriminatory.”
Auto rates vary depending on a number of factors, including:
- Age
- Gender
- Marital status
- Place of residence
- Type of car
- Driver history
- Claims history
- Policy limits
- Deductible
- Credit score
- Car use (how often you drive and what you use your vehicle for)
What if no one will sell me auto insurance?
If all the insurance companies are turning you down (perhaps because you have a lengthy claims history or several accidents on your record), you can apply for the Indiana Auto Insurance Plan through any insurance agent in Indiana.
Are the police allowed to ask me for my insurance information?
Yes. Additionally, the Bureau of Motor Vehicles (BMV) is required to verify that all motorists have the minimum liability insurance coverage if the motorist is involved in:
- A car accident
- A pointable moving violation within 1 year of receiving 2 other pointable moving violations
- A serious traffic violation
- Any pointable violation by a driver who was previously suspended for failing to provide proof of insurance
Can my insurance company cancel my policy whenever they want?
The Indiana Department of Insurance requires insurance companies to follow certain guidelines when it comes to canceling your auto policy:
- Your insurance company can cancel your auto policy within the first 60 days of a new policy for any reason.
- After the first 60 days, your insurance company can only cancel your policy for certain reasons, such as your failure to pay.
- At the end of your policy period, your insurance company can refuse to renew your policy, but they must give you 20 days notice.
Where can I find an attorney to handle my insurance-related matter?
If you find that you’re not getting what you need from the insurance company you’re working with, or you think you may need to file a personal injury lawsuit against the at-fault driver, or you just want to discuss your options and make sure you’re covering all your bases, it’s a good idea to schedule an initial consultation with an experienced Indiana personal injury attorney.
See our guide Choosing a personal injury attorney.