Delaware Auto Insurance Requirements

Delaware law requires all motor vehicle owners to maintain minimum auto insurance coverage. Understanding Delaware's specific requirements is essential for both drivers and insurance producers.

Delaware Minimum Liability Coverage

Required Liability Limits: 25/50/10

Delaware requires minimum liability coverage expressed as:

25/50/10 Split Limits:

• $25,000 per person for bodily injury
• $50,000 per accident for bodily injury (all persons)
• $10,000 per accident for property damage

Understanding Split Limits

Bodily Injury Liability:

Per Person Limit ($25,000):

• Maximum paid to any single injured person
• Covers medical bills, lost wages, pain and suffering
• May be insufficient for serious injuries

Per Accident Limit ($50,000):

• Maximum paid to all injured persons in one accident
• Shared among multiple injured parties
• If 3 people injured, $50,000 total divided among them

Example Scenario:

• Accident with 3 injured persons
• Person A injuries: $30,000
• Person B injuries: $25,000
• Person C injuries: $20,000
• Total claims: $75,000

Insurance Pays:

• Person A: $25,000 (per person limit)
• Person B: $25,000 (per person limit)
• Person C: $0 (per accident limit of $50,000 exhausted)
• Driver personally liable for remaining $25,000

Property Damage Liability ($10,000):

• Maximum paid for damage to others' property
• Covers vehicles, buildings, fences, etc.
• Often insufficient for expensive vehicle damage
• Driver liable for damage exceeding $10,000

Exam Tip: Delaware's 25/50/10 liability limits are MINIMUMS. Many experts recommend higher limits (100/300/100 or more) because minimum limits are often insufficient to cover serious accidents. Drivers with assets to protect should carry higher liability limits.

Liability Coverage Explained

What Liability Insurance Covers:

• Bodily injury to others caused by your negligence
• Property damage to others' property
• Legal defense costs (in addition to policy limits)
• Court judgments and settlements up to policy limits

What Liability Insurance Does NOT Cover:

• Your own injuries or medical bills
• Damage to your own vehicle
• Injuries or damage you intentionally cause
• Damage from excluded drivers or uses

Single Limit Liability

Alternative to Split Limits:

• Combined Single Limit (CSL): One limit for all bodily injury and property damage
• Example: $100,000 CSL = $100,000 total for all claims (bodily injury + property damage)

Advantages of CSL:

• More flexibility in claim payments
• No per-person or per-accident sublimits
• Simplifies coverage structure

Delaware Law:

• Delaware allows CSL as alternative to split limits
• Must meet or exceed minimum split limit equivalents

Uninsured and Underinsured Motorist Coverage

Delaware UM/UIM Requirements

Mandatory Coverage:

• Delaware REQUIRES Uninsured Motorist (UM) coverage
• Delaware REQUIRES Underinsured Motorist (UIM) coverage
• UM/UIM limits must equal liability limits unless rejected in writing

Standard UM/UIM Limits:

• If you carry 25/50/10 liability, you must have 25/50/10 UM/UIM
• If you carry 100/300/100 liability, you must have 100/300/100 UM/UIM
• Can reject UM/UIM in writing, but NOT recommended

Uninsured Motorist (UM) Coverage

When UM Coverage Applies:

1. Hit by Uninsured Driver

   • At-fault driver has no insurance
   • Your UM coverage pays your injuries
   • Up to your UM policy limits

2. Hit-and-Run Accident

   • Unknown driver flees scene
   • Your UM coverage pays your injuries
   • May require police report

3. Insurer Becomes Insolvent

   • At-fault driver's insurer goes bankrupt
   • Your UM coverage responds
   • Delaware Insurance Guaranty Association also provides protection

UM Coverage Protects:

• You (named insured)
• Family members in your household
• Passengers in your vehicle
• You when driving other vehicles (in some cases)

What UM Covers:

• Medical expenses
• Lost wages
• Pain and suffering
• Funeral expenses (if fatal accident)

Underinsured Motorist (UIM) Coverage

When UIM Coverage Applies:

At-fault driver has insurance, but limits are insufficient to cover your damages.

Example:

• At-fault driver has 25/50/10 liability (minimum)
• Your injuries total $60,000
• At-fault driver's insurance pays: $25,000 (their per-person limit)
• Your UIM coverage pays: $35,000 (up to your UIM limit)
• You receive full $60,000 compensation

UIM Payment Calculation: $\text{UIM Payment} = \text{Your Damages} - \text{At-Fault Driver's Payment}$ $\text{Maximum UIM} = \text{Your UIM Limit} - \text{At-Fault Driver's Limit}$

UIM Limit Reduction:

• Your UIM limit is reduced by at-fault driver's payment
• Example: Your UIM limit $100,000, at-fault driver pays $25,000
• Maximum additional UIM payment: $75,000

Rejecting UM/UIM Coverage

Delaware Law:

• Insurers must offer UM/UIM equal to liability limits
• Insured may reject in writing
• Rejection form must be signed by named insured
• Can select lower UM/UIM limits (not recommended)

Why Rejection is Risky:

• Significant portion of Delaware drivers are uninsured or underinsured
• Serious accident with uninsured driver could result in no compensation
• Medical bills and lost wages could be substantial
• UM/UIM coverage relatively inexpensive for protection provided

Exam Tip: Delaware REQUIRES insurers to offer UM/UIM coverage equal to liability limits. Insureds can reject coverage in writing, but this is not recommended because many Delaware drivers carry only minimum liability limits or no insurance.

Personal Injury Protection (PIP)

Delaware PIP Requirements

Mandatory Coverage:

• Delaware REQUIRES Personal Injury Protection (PIP)
• Minimum PIP: $15,000 per person, $30,000 per accident
• Optional higher limits available

PIP is "No-Fault" Coverage:

• Pays regardless of who caused accident
• Your PIP pays your injuries even if you're at fault
• Reduces litigation for minor injuries

What PIP Covers

Medical Expenses:

• Hospital and doctor bills
• Surgery and rehabilitation
• Prescription medications
• Medical equipment and devices

Lost Wages:

• Income lost due to injury
• Typically 80% of lost income
• Maximum limits apply

Replacement Services:

• Household services you can't perform
• Childcare, cleaning, lawn care
• Reasonable and necessary services

Funeral Expenses:

• If accident results in death
• Up to PIP policy limits

PIP Payment Priority

Coordination with Other Coverage:

1. PIP pays first for your injuries (primary coverage)
2. Health insurance may pay excess or coordinate benefits
3. UM/UIM or liability pays if PIP exhausted and other party at fault

Example:

• Your medical bills: $20,000
• Your PIP limit: $15,000
• PIP pays: $15,000
• Remaining $5,000: Claim from at-fault driver's liability or your health insurance

PIP vs. Medical Payments Coverage

Financial Responsibility Law

Delaware Financial Responsibility

Delaware requires all drivers to maintain financial responsibility:

Methods to Prove Financial Responsibility:

1. Auto Insurance Policy

   • Most common method
   • Must meet minimum liability limits (25/50/10)
   • Includes UM/UIM and PIP

2. Cash Deposit

   • Deposit $75,000 with Delaware Treasurer
   • Held as security for potential claims
   • Rarely used

3. Surety Bond

   • $75,000 surety bond from approved company
   • Guarantees payment of claims
   • Uncommon

4. Self-Insurance Certificate

   • Large fleets or government entities
   • Demonstrate financial ability to pay claims
   • Requires DMV approval

Proof of Insurance

Delaware Requirements:

• Carry proof of insurance in vehicle at all times
• Provide proof when requested by law enforcement
• Proof: Insurance ID card or policy declarations

Penalties for No Insurance:

• Fines and penalties
• License suspension
• Vehicle registration suspension
• SR-22 requirement
• Potential jail time (repeat offenses)

SR-22 Certificate

What is an SR-22?

SR-22 Defined:

• Certificate of Financial Responsibility
• Filed by insurer on behalf of driver
• Proves driver carries required insurance
• Required for high-risk drivers

SR-22 is NOT Insurance:

• SR-22 is proof of insurance, not insurance itself
• Driver must have auto insurance policy
• Insurer files SR-22 certificate with Delaware DMV

Who Needs SR-22?

Common SR-22 Requirements:

1. DUI or DWI Conviction

   • Driving under the influence
   • Most common reason for SR-22

2. Driving Without Insurance

   • Caught driving uninsured
   • Serious or repeated violations

3. Multiple Traffic Violations

   • Excessive speeding tickets
   • Reckless driving
   • At-fault accidents

4. License Suspension or Revocation

   • Suspended license reinstatement
   • SR-22 required to restore driving privileges

5. Court Order

   • Judge orders SR-22 as condition of probation

SR-22 Requirements and Duration

SR-22 Filing:

• Insurance company electronically files SR-22 with Delaware DMV
• DMV monitors SR-22 status
• SR-22 must remain on file for required period

Duration:

• Typically 3 years in Delaware
• Continuous coverage required
• Any lapse triggers DMV notification

Maintaining SR-22:

• Keep continuous auto insurance
• Insurer notifies DMV if policy cancelled or lapses
• DMV suspends license if SR-22 lapses
• Must start 3-year period over if lapse occurs

Cost of SR-22:

• Filing fee: $15-$50 typically
• Higher insurance premiums (high-risk driver)
• Premiums may be 2-3× normal rates

Exam Tip: An SR-22 is a certificate of financial responsibility, not insurance. It proves a high-risk driver carries required insurance. Delaware DMV requires SR-22 for DUI convictions, driving without insurance, and serious violations. SR-22 must remain on file for 3 years continuously—any lapse restarts the clock.

Delaware Auto Insurance System

Tort System

Delaware uses a tort system for auto insurance:

Tort System Characteristics:

• At-fault party is liable for damages
• Injury victims can sue negligent drivers
• Liability insurance covers at-fault driver
• No restrictions on lawsuits (not a no-fault state)

Implications:

• Serious accidents can result in lawsuits exceeding policy limits
• At-fault drivers personally liable for damages exceeding insurance
• Encourages carrying liability coverage above minimums
• Umbrella policies provide additional protection

Comparative Negligence

Delaware Modified Comparative Negligence (51% Bar Rule):

Delaware follows modified comparative negligence:

Rule:

• You can recover damages if you're 50% or less at fault
• Your recovery is reduced by your percentage of fault
• If you're 51% or more at fault, you recover NOTHING

Examples:

Example 1: 20% At Fault

• Total damages: $100,000
• You're 20% at fault
• You recover: $80,000 ($100,000 - 20%)

Example 2: 50% At Fault

• Total damages: $100,000
• You're 50% at fault
• You recover: $50,000 ($100,000 - 50%)

Example 3: 60% At Fault

• Total damages: $100,000
• You're 60% at fault (more than 50%)
• You recover: $0 (barred from recovery)

Exam Tip: Delaware uses the 51% bar rule for comparative negligence. If you're 51% or more at fault, you cannot recover any damages. If you're 50% or less at fault, you can recover damages reduced by your percentage of fault.

Delaware Auto Insurance Coverages

Comprehensive Coverage Summary

Optional Physical Damage Coverage

Collision Coverage:

• Pays for damage to your vehicle from collision
• Covers accidents with other vehicles or objects
• Subject to deductible ($250, $500, $1,000 typical)
• Pays actual cash value (ACV) of damage or vehicle

Comprehensive Coverage:

• Pays for damage to your vehicle from non-collision perils
• Theft, vandalism, fire, flood, hail, animal strikes, falling objects
• Subject to deductible (often lower than collision)
• Pays actual cash value (ACV) of damage or vehicle

When Physical Damage Coverage Makes Sense:

• Vehicle is financed or leased (lender requires)
• Vehicle has significant value
• You can't afford to replace vehicle out-of-pocket
• Peace of mind

When to Drop Physical Damage Coverage:

• Vehicle is old with low value
• Replacement cost exceeds vehicle value
• You can afford to replace vehicle without insurance
• Annual premiums approach vehicle value