Insurance companies and State Departments of Insurance are constantly searching for ways to make sure everyone that operates a motor vehicle has the insurance coverage necessary to pay for claims resulting from accidents they cause.  State mandatory minimum liability limits are an example of this type of legislation.

This in turn will make American roads safer to drive on and save us all money.  At the end of the day, we all indirectly contribute our hard earned money to pay for accidents in which there is no insurance.

Of course, not everyone can afford the necessary coverage to be fully insured against loss.  This affects how car insurance rates are determined.  One way insurance companies address this problem is by reducing coverage and simply lowering rates.

The latest attempt to lower car insurance rates is the invention of the restricted, or limited, insurance policy.  In some cases, it is referred to as a broad form policy, which is a misnomer, as it doesn’t broaden coverage, but rather restricts it.

The restricted insurance policy is the cheapest, most bare bones auto insurance policy on the market today.  This type of policy only includes liability coverage and will only cover a single individual, the named insured, for claims.  The typical insurance policy covers the insured and various additional people.

What does this mean to “restricted policyholders?”  It means there is no coverage on your policy for family members or friends.  So if your friend borrows your car and causes an accident, your insurance company will deny the claim.  This means you will be partially responsible for paying for it.

I only recommend this policy if you live alone and there is no chance someone else will drive your car.

Contact your insurance company or insurance agent if you have coverage questions.  Individual circumstances dictate your exact coverage needs.

Also consider getting an online insurance quote to make sure you have the best coverage at the lowest price.