Do You Have Enough Liability Coverage?
by Ryan Hurlbert
Many think auto liability insurance is only there to protect the people they hit in an accident. If they are only buying insurance to pay for other people's injuries, why carry more than the law requires? Some think that they are saving money by buying the lowest coverage limits available.
Liability Insurance Protects You
But auto liability insurance does not protect others--it protects you. Your auto insurance policy protects you from financial hardship caused by an auto accident claim.
If you injure someone in an auto accident, you are responsible for their loss. The insurance company steps in and pays that loss up to the liability limit of your policy, but you are still responsible for the total claim.
Minimum Liability Requirements
Most states require about $25,000 per person, $50,000 per accident in bodily injury liability coverage, and $10,000 in property damage protection. With the minimum state coverage, this is what your insurance company is required to cover:
- The first $25,000 out of the claim, for any individual involved, and a maximum of $50,000 for all claims arising from that accident
- Legal defense until claims have exhausted the liability limit of your policy
- The first $10,000 dollars of property damage
After that, you are on your own. When you are on your own, assets can be attached, your wages can be garnished, and your ability to get a loan or a job can be in jeopardy until the judgment against you is satisfied.
Consider Your Current Liability Coverage
Low liability limits can be a way to save on auto insurance. If you have no assets or are just starting out in life, the minimum liability coverage may make sense for you.
But, if you have a promising career or own a home, the minimum liability coverage may not be the way you should save money on auto insurance. Consider what you have to protect--do you have home equity, savings, or what about your future earnings?
Expand Your Coverage
Luckily for you, insurance coverage can be expanded. The minimum coverage required by most states has a base cost, but doubling the coverage does not double the price.
If you own a home or have any assets to speak of, $250,000 per person, and $500,000 per accident for bodily injury liability is a good starting point. It is ten times the minimum coverage, but it should be nowhere near ten times the price.
Make sure you set your auto policy liability limits high enough to protect what you worked so hard for, but make sure that you don't buy more than you need or can afford.
If you want to save money on auto insurance, find cheap car insurance the easy way--fill out the form at the top of the page and get quotes from several companies.
About the Author
Ryan Hurlbert lives and works in the Pacific Northwest. As an insurance agent, he produced and presented educational seminars on various topics from insurance basics to strategies for dealing with teen drivers. He has researched and produced marketing materials in the insurance, auto, and financial industries. Ryan majored in business and received his Bachelor of Science degree from Portland State University.
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