Auto Insurance Requirements in Illinois

Auto Insurance Requirements in Illinois

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The Illinois State Legislature Vehicle Code requires that all Illinois motorists carry auto insurance meeting minimum liability limits. This proves their financial responsibility to cover and pay other third parties for any vehicle accidents they cause and are determined to be at fault for. A mandatory insurance policy in Illinois is slightly different from other states in that you are also asked to carry uninsured motorist coverage. There is no alternative to getting a mandatory auto insurance policy for motorists in Illinois - unless you own more than 26 cars here.

Acceptable forms of proof include an insurance ID card issued by your insurer, as well as a copy of the declaration page of your insurance policy. There are two occasions when you will be asked to verify your vehicle insurance. First is through the Illinois insurance questionnaire sampling process, during which the Secretary of State will send a questionnaire to a randomly selected driver asking for the name of their insurer and policy number. If the information provided does not match, your license plate will be suspended. The second is if you are ever pulled over on the road; the law enforcement officer also has the power to ask you to present your driver’s license along with evidence of insurance.

Illinois Required Car Insurance Coverage

Required Min. Limits

Bodily Injury (BI)

$25,000 per person / $50,000 per accident

Property Damage (PD)

$20,000 per accident

Uninsured Motorist Bodily Injury (UMBI)

$25,000 per person / $50,000 per accident

Illinois Car Insurance Minimum Requirements

You are required to have an auto insurance policy in place to cover injuries or property damage when you cause an accident in Illinois. Your policy must also meet a minimum amount of coverage in order to satisfy Illinois law. While you only need a policy with the minimum limits to drive legally here, higher limits are usually available, and oftentimes recommended by both the government and agents. How much liability coverage you should get depends on your assets and desire for protection. Here are the mandatory minimums:

Bodily Injury (BI): a minimum of $25,000 per injured person or $50,000 for two or more injured people in any accident in the Prairie State. This coverage takes care of the medical care and other expenses you may be liable for, including the other injured driver's lost wages due to injuries from the accident you're at fault for

Property Damage (PD): a minimum of $20,000 in costs for property damage in any accident, which will pay for repairs to properties or the loss of use of the properties because of the accident you have caused

Uninsured Motorist Bodily Injury (UMBI): the same minimum limits as the BI coverage, this coverage protects YOU when you are a victim of a crash caused by an uninsured motorist. With this coverage, your insurer will reimburse your medical and other expenses that the other driver would have been liable for if he or she were properly insured. Illinois is one of the 21 other states that makes this coverage mandatory. Your UMBI limits can't be higher than your BI limits on the same policy - you can choose to purchase higher limit of UMBI if you also raise your BI limits

Underinsured Motorist Bodily Injury (UIMBI): usually optional to include into your policy, this coverage covers you when the other driver is deemed negligent or at-fault, and is underinsured. In other words, it covers the difference when the driver is unable to cover the full costs of your medical expense because he or she has a lower limits than your UMBI limits. UIMBI becomes a mandatory coverage when you elect to purchase higher UMBI limits.

Other Optional Coverage

The main purpose of mandatory liability coverage in Illinois is make sure that you will be responsible for the other party's costs in an accident that you caused. However, there are other insurance coverages that protects the first-party - you - in the event of an accident, or just protection against damage to your vehicle. Below is a list of the most common coverages that you will find with a standard auto insurance provider in Illinois:

Collision Coverage: one of the two physical damage coverages, collision covers the costs of your car repair when it is damaged in a car accident. There is usually a deductible or out-of-pocket amount that you pay before this coverage kicks in.

Comprehensive Coverage: the other physical damage coverage, this is what covers your car repair for damages from causes besides colliding with another object in Illinois. You may find that some insurers won't let you buy Collision without also having Comprehensive.

Medical Payments: also called first-party benefits, this coverage will reimburse your own medical expenses from an accident, even if you are responsible for it. In other states, this coverage is also known as the personal injury protection.

Uninsured Motorist Property Damage: similar to UMBI, this coverage kicks in when you are involved in an accident caused by an uninsured driver. However, this protection covers any property damage you sustained from the accident.

Alternative Proof of Financial Responsibility

In Illinois, unless you have more than 25 cars registered under your name, there is no alternative to getting a policy with at least the mandatory insurance limits. However, if you do have 26 cars or more, you may be able to apply to become a self-insurer.

Self-Insurance: any person – which includes an individual, firm, copartnership, association or corporation – who owns more than 25 cars may be qualified as a self-insurer for his or her fleet. Call the Department of Insurance for a self-insurance application, and file the required documents along with the $200 application fee. The Department of Insurance is essentially looking for evidence that you can at least handle the same amounts of claims as would an insurance company through a minimum policy. With a regular auto insurance policy, the insurer typically pays up to an established limit - there is no clear language or direction limiting the maximum amount of payment that a self-insurer is responsible for in a given accident.

Alternative to SR-22 Under the Safety and Financial Responsibility Law

There is one other specific situation when alternatives to an auto insurance policy can be used to prove you're financially responsible to drive. You have to be an uninsured motorist who was caught in an accident that you're more than 50% responsible for. Besides dealing with a suspended drivers license or vehicle registration, you'll now be forced to get auto insurance, and file an SR-22. The SR-22 is a certificate that states the existence and limits of your coverage, and is filed by your insurance company with the state government. If for some reasons you are unable to provide an SR-22 from a licensed insurance provider, here are some alternatives to prevent driver’s license suspension (or to reinstate it):

$70,000 Cash Deposit: if you don't want auto insurance, you'll have to prove that you are capable of meeting the minimum requirements on your own by depositing cash with the state. The $70,000 represents the combined limits per accident under an insurance policy's mandatory liability coverages. This deposit must be made with the Illinois State Treasurer, after which the Secretary of State will issue you a certificate verifying the deposit.

A surety bond: you get a licensed IL surety company to issue you a surety bond for $70,000, which means that it will pay the damages from claims made against you in an accident you cause (but they'll come after you for repayment). You must send a copy of this bond to the Secretary of State, who will then send you a certificate for your proof.

A real estate bond: with this bond, you essentially have two other individuals use their own real estate property in Illinois to insure you up to $70,000. An effective real estate bond will have the approval of a judge from the county court where the real estate listed is located. After verifying the bond, the Secretary of State will issue you a certificate.

Release or Covenant Not to Sue: if you manage to reach a settlement with the injured party to agree on your release of liability, you will not need to submit an SR-22.

Mark is a Senior Research Analyst for ValuePenguin focusing on the insurance industry, primarily auto insurance. He previously worked in financial risk management at State Street Corporation.

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