Indiana’s auto insurance laws affect drivers in a number of ways, from requiring certain minimum coverage to affecting when, where, and how one Indiana driver may sue another after an accident. This article explains the basics of those laws. Here you’ll find information on Indiana’s minimum auto insurance requirements, what insurance does (and doesn’t have to) cover, and how your insurance gets involved if you are sued by another driver. For more general information on settlements, check out our companion article Car Accident Laws in Indiana.
Auto insurance rules fall into one of two categories depending on what state you’re in: “fault” (or “at fault”) and “no-fault.” Indiana is a “fault” insurance state, which means that drivers have more freedom to decide how they are going to proceed in terms of pursuing compensation for damages after an auto accident. Basically, if you’re an Indiana driver who has been injured or been left with a damaged vehicle after a crash for which another driver is at fault, you can file a claim under your own insurance policy, pursue a claim against the other driver’s insurance policy, and/or file a lawsuit against the other driver.
(By contrast, in a “no-fault” state, each driver typically files a claim with his or her own insurance company, regardless of who caused the accident. The options for bringing a lawsuit against another driver are limited in most no-fault states. Drivers in Indiana don’t need to be experts at no-fault insurance rules, but if you’re going to be driving in a no-fault state, or are just curious, you can learn more by checking out our article No-Fault Car Insurance Laws: The Basics.)
Under Indiana law, oweners of registered vehicles aren't required to carry liability car insurance per se, but they must demonstrate "financial responsibility" in the event of a car accident, and most vehicle owners do end up choosing to purchase insurance as a way of complying with this rule. The minimum amounts of "financial responsibility" for a car accident in Indiana are:
These amounts cover the bills when an accident you’re in causes injuries or property damage. “Property damage” includes both real estate and fixtures, like houses and fences, and damage to other vehicles. The minimum property damage coverage, however, does not apply to the costs of fixing your own car after a crash.
Finally, “uninsured/underinsured motorist” coverage covers costs if you’re in a crash with a driver who either doesn’t have any insurance at all, or doesn’t have enough insurance coverage to pay for all the medical bills and other losses related to the accident. It's important to note that you're free to decline UIM coverage when you purchase a car insurance policy in Indiana, but you must do so in writing. Learn more about Uninsured Motorist and Underinsured Motorist coverage.
Every Indiana vehicle owner must be able to show financial responsibility in line with the minimums listed above. However, drivers are allowed to purchase coverage with higher limits. Also, it’s often a good idea to consider purchasing additional coverage that will pay for damage to your car. Known as “collision” and/or “comprehensive” coverage, this insurance pays to fix or replace your car if it’s hit by another car (collision) or by an object or animal (comprehensive). Learn more about Vehicle Damage After a Car Accident.
Most drivers opt to buy insurance in order to meet the coverage requirements listed above. When you purchase an Indiana vehicle insurance policy, the insurance company automatically notifies the Indiana Bureau of Motor Vehicles that you’ve met the “financial responsibility” requirement that’s mandated under Indiana driving laws. However, you can also meet this requirement by certifying your SR-21 financial responsibility for a traffic accident or moving violation in some other way. meeting Indiana’s requirements for an SR-21 financial responsibility certificate. (Note: “SR-21” refers to the compliance form that your car insurance carrier must complete and file with the state in order to verify your financial responsibility.)