Auto insurance requirements in Iowa

In order to be a road-legal driver in Iowa, you must carry a certain amount of insurance coverage. This coverage goes toward protecting both you and other drivers and pedestrians. Below you can see the mandatory limits as prescribed by Iowa law as well as a breakdown of what each type of coverage does.

It’s important to remember that those leasing or financing their vehicles may be required to purchase further physical damage coverage, sometimes referred to as full coverage. 

Iowa is a modified comparative negligence state

Iowa uses what is called modified comparative negligence when determining fault in an accident. What this means is that fault can be assigned to both parties involved, but to varying degrees. In order for you to recover damages in Iowa, the other driver must be at least 51% at fault. For instance, if you are in an accident, it could be that 75% of the guilt is attributed to the other party while 25% is assigned to you. If $10,000 is awarded in the ruling, you are eligible for 75% of the award, or $7,500.

Some of the compensable car accident damages include:

• Vehicle repair/replacement
• Medical costs
• Rental cars
• Pain and suffering
• Wrongful death
• Lost wages

Liability coverage in Iowa

Liability car insurance is the only insurance coverage required in the state of Iowa. Liability coverage pays for damages that you cause to another as a result of an at-fault accident. It contains two specific types of coverage: bodily injury (BI) and property damage (PD) liability. Bodily injury liability covers medical bills and funeral expenses while property damage liability covers damages you inflict on the property of another.

Importantly, liability never pays for your injuries or damages to your own vehicle. For that, you would need to explore some of the optional physical damage coverage offered by most insurers.

What are state-mandated car insurance limits?

Put simply, the limit is the lowest amount of insurance coverage that you can have. From an insurer’s perspective, that limit is the maximum amount that they will pay out to cover a claim. The liability limits in Iowa are often written out as 20/40/15. Known as a split limit, this signifies the limit for each of the three types of liability coverage: bodily injury per person, bodily injury per accident, and property damage. We’ll explore each of these coverages in more detail below.

• The per-person limit is the total dollar amount available for the injuries of any individual person that you harm in a car accident. 
• The per-accident limit is the total overall amount that your insurer will pay for all bodily injuries that you cause in a single accident that involves more than one other person.
• The property damage limit is the amount that goes toward covering any physical damage you cause to another person’s property.

Do Iowa’s required minimums provide enough coverage?

Iowa’s liability limits fall on the lower end of what most states require. This means that having the bare minimum amount of coverage isn’t necessarily going to mean that you are fully protected. For one thing, liability does not cover your vehicle. If your vehicle is newer or is worth more than $4,000, it’s a good idea to purchase physical damage coverage which can be found from most providers.

Liability limits themselves could fall short in many cases. This is especially true if you injure multiple people, as your bodily injury limits can be exhausted pretty quickly. This goes for property damage as well, as the $15,000 limit barely goes halfway toward the average cost of a new vehicle. Luckily, these limits can often be increased relatively cheaply through additional premiums. Keeping these limits as high as you can reasonably afford keeps you protected from a good amount of unnecessary risk.

Iowa’s penalties for driving without proof of insurance

Iowa’s mandatory car insurance laws state that you must be able to show financial responsibility in the form of liability insurance. This can be physical or digital if shown on a device such as your mobile phone. If you cannot provide proof of insurance, you can face a series of penalties, including:

• A $250 fine
• Vehicle impoundment
• 12-month license suspension for damages exceeding $1,500
• Vehicle registration suspended

Optional car insurance coverage in Iowa

Though Iowa only requires drivers to carry liability coverage, most insurers offer a number of other coverages that can protect you further. Have a look at some of the more common coverage types below:

• Comprehensive: Comprehensive coverage protects your vehicle against non-collision damages your vehicle might sustain (though it does cover collisions with animals). 
• Collision: Collision coverage goes toward covering your vehicle in the event that you collide with another car or fixed object. Keep in mind, however, that collisions with animals are covered under comprehensive only.
• Gap coverage: Because of the rapid depreciation of most new vehicles, it can be a good idea to have some built-in protection to cover the actual cash value of your car and what you still owe on your loan. Sometimes known as loan/lease coverage, this is a great option for those who don’t want to be caught upside down in a loan. 
• Medical payments: Often referred to as “med pay,” this coverage goes towards your medical bills or funeral expenses (as well as those incurred by passengers in your vehicle). This coverage usually has limits that fall between $5,000 and $10,000 and can be used regardless of who is at fault.
• Rental Car Reimbursement: If your car is made inoperable because of a covered loss, this coverage can go toward paying for a rental until yours can be fixed. Limits and terms can vary depending on which company you choose.
• Roadside assistance: If you break down on the highway, this coverage goes toward covering the cost of a tow, battery charge, or a number of other related costs.
• Uninsured/underinsured motorist (UM/UIM): Uninsured/underinsured motorist insurance is very helpful in the event that you suffer injuries or property damage in an accident in which an uninsured or underinsured driver is at fault and cannot pay.

Iowa is a diminished value state

Iowa is a diminished value state, meaning drivers are allowed to recover diminished value from the at-fault party’s insurance company. When your vehicle experiences an accident, even if it is fully repaired to its pre-loss condition, the resale value decreases. The involvement in a collision makes your car’s value lesser than similar vehicles that have not experienced an accident. A diminished value claim allows you to recoup the losses you might experience when selling your car. 

Since Iowa is one of the 15 states that offers compensation for diminution in value, you may file by contacting the at-fault party’s insurer. In order to file a diminished value claim in Iowa, certain requirements must be met:

• You are not entitled to compensation if you were the party at fault in the accident
• Documentation will be required to process your claim. Make sure you can provide photos, records of repairs made, and proof of the value of your vehicle by a trusted source. 
• In Iowa, the statute of limitations for filing a diminished value claim is 2 years. 
• Iowa does have uninsured motorist coverage for diminished value claims.

Why adhering to Iowa’s car insurance requirements is important

Not only is it the law to carry car insurance while driving in Iowa, but it’s also just the smart thing to do. If you want to protect yourself and your assets, increasing your coverage to the appropriate amounts is a great way to start. If you are worried about the cost of these increases, take heart. The Zebra can help you compare different insurance plans and quotes from a number of top providers, helping you find the best plan at a rate you can afford.

Sources:

• Iowa proof of Insurance laws
• Iowa insurance laws