How much liability insurance do I need to purchase?
Car insurance aims to protect drivers, passengers, and others from financial losses that may arise due to accidents or other incidents involving their vehicles.
Despite the clear benefits of car insurance, almost 9 percent of drivers in Iowa are uninsured.
Let’s take a closer look at car insurance requirements in Iowa, including the penalties for driving without insurance and your legal options if you’re involved in a car accident with an uninsured driver.
Iowa car insurance minimum requirements
Iowa law requires anyone who drives a motor vehicle or motorcycle in the state to carry liability insurance with the following minimums:
- $20,000 for injuries or death to one person
- $40,000 for injuries or death to two or more persons in any one accident
- $15,000 for damage to another person’s property
Insurance companies in Iowa are required to offer uninsured/underinsured motorist coverage, but drivers can reject the coverage without penalty.
Penalties for driving without insurance in Iowa
Iowa requires drivers to provide proof of insurance upon request from a law enforcement officer.
If you’re caught driving in Iowa without the minimum car insurance required by law, the police officer has three options:
- Issue a warning,
- Issue a citation, or
- Issue a citation and remove the motor vehicle’s license plates and registration receipt
If you’re issued a citation, it will be a fine in the amount of $250. In addition, your license and registration may be suspended.
The most severe consequence of driving without insurance is that you will be held personally liable for all damages that result from an accident that you cause. This can be financially devastating if the accident results in an injury.
Keep in mind that even if you don’t have any money in your bank account, the injured driver can obtain a court order allowing them to garnish your future wages and sell certain assets that you own if you’re found liable.
Optional Iowa insurance coverage
The minimum liability insurance required is often not enough to cover a serious accident or even a minor accident involving minor injuries to multiple people, which means you’ll be liable for damages that exceed your policy limits. For this reason, many people choose to purchase additional liability insurance.
Along with additional liability insurance, drivers in Iowa can purchase the following optional coverage:
- Comprehensive coverage provides coverage for losses other than those caused by a collision (flood, falling trees, fire, etc.).
- Collision coverage provides coverage for damage to your vehicle caused by an accident with another vehicle or an object (such as a telephone pole).
- Med-Pay provides coverage for medical expenses incurred by you and your passengers regardless of who is at fault. Med-Pay limits apply per person and typically range from $5,000 to $10,000.
- Personal injury protection (PIP) provides the same coverage as Med-Pay but also includes coverage for lost wages and transportation expenses.
- Rental car reimbursement provides coverage for a rental car if your car is made inoperable due to a covered loss.
- Roadside assistance provides coverage for the cost of a tow, battery charge, or other costs related to a breakdown.
- Uninsured and underinsured motorist coverage covers bodily injury to you, your relatives who live with you, and your passengers if they're injured in an accident caused by an uninsured or underinsured motorist.
Is your friend or family member covered by your insurance if they borrow your vehicle?
Let’s say you let your friend borrow your truck so he can transport something to the dump. On the way to the dump, he runs a red light and crashes into a station wagon. The occupants of the station wagon are seriously injured.
In Iowa, liability coverage typically follows the car. This means YOUR insurance policy would cover the damage to the station wagon and the injuries suffered by its occupants (up to the policy limits).
If the damages exceed your policy limits, your friend’s auto insurance policy may serve as secondary coverage to make up the difference.
Collision and comprehensive insurance typically follow the car in Iowa, so your policy would cover the damage to your car.
Does Iowa have an insurance grace period?
When you purchase a new car, you’re required to add your new car to your current insurance policy. In the excitement of purchasing a new car, many people forget to add their new car or just assume that their current insurance policy will automatically cover their new car.
Due to this common mistake, most auto insurers provide a grace period (typically 2-30 days) during which you can drive your newly purchased vehicle before adding it to an existing car insurance policy. If you’re involved in an accident during this grace period, your current auto insurance policy terms will apply.
Your rights under Iowa’s insurance laws
Under Title XIII, Chapter 507B of the Iowa Code, the state prohibits insurance companies from unreasonably denying your insurance claim or engaging in any deceptive acts, which include things like:
- Misrepresenting pertinent facts or insurance policy provisions
- Failing to acknowledge and act reasonably promptly after a claim is filed
- Failing to promptly investigate a claim
- Refusing a claim without conducting a reasonable investigation
- Failing to affirm or deny a claim within a reasonable time
- Forcing the insured to initiate or submit to litigation by offering substantially less than the amount ultimately recovered in litigation
How to recover damages after an Iowa car accident
Iowa is an at-fault state when it comes to car accidents. This means that the person responsible for causing your car crash is also responsible for paying the damages.
If you’re involved in an accident that’s not your fault, you have 3 options for recovering damages:
- File an insurance claim with your own insurance company. In this situation, your insurance company will turn around and pursue reimbursement from the at-fault driver’s insurance company (this process is called “subrogation”).
- File a third-party insurance claim directly with the at-fault driver’s insurance company.
- File a personal injury lawsuit in civil court against the at-fault driver.
If the driver who caused the accident doesn’t have insurance, you’ll need to file a personal injury lawsuit against the at-fault driver or use your uninsured motorist insurance (assuming you have the optional coverage).
Still have questions about car insurance? These resources may help:
- Can a demand payment letter keep your dispute out of court?
- Dealing with insurance claims adjusters
- Tactics insurance adjusters may use
- Steps to an insurance claim settlement
- Personal property damage in an auto accident
- Maximum medical improvement and your claim
- All about Independent Medical Exams (IMEs)