Car Companies

You will never know how much insurance coverage you will need until you need it, so it’s better to be safe than sorry. First let’s take a look at what Auto Insurance Liability covers. There are two parts to your liability coverage the first is bodily injury liability and the second is property damage liability.

Bodily injury liability covers injuries do to a car accident.

1. Initial aid

2. Medical bills due to injuries

3. Restitution for lost salary

4. Death benefits

5. Legal defense fees and/or bail bonds for anyone listed on your policy

Property damage liability protects you against damages that you cause to another in a car accident.

1. Homes, building, etc that receive structural damage

2. Repair or replacement costs for other stationary objects

3. Automobile damage or total loss compensation

So, you are probably thinking to yourself what coverage limits should I have? Minimum liability guidelines are set by each individual state, they are usually 15,000/30,000/15,000 worth of coverage. The reason there is 3 numbers instead of two is because body injury liability is usually set in split limits but you could request a single limit of coverage.

Split Limits: Then if you decided to have split limit coverage the 15,000 from the paragraph above misrepresenting individual coverage for injuries incurred during an accident. While the 30,000 is the total for injuries that incurred for the entire accident with a separate 15,000 for property damages. If you had chosen a single limit of coverage there is only one limit to be divided however need up to the maximum chosen for bodily injury.

Property Damage coverage is always the last number which is represented by $15,000 in the example above.

What is right amount of liability coverage? The most common amount of coverage is a split limit of $100,000/$300,000 bodily injury with a property damage coverage equal to $50,000. People that take out lower limit are really exposing themselves to financial disaster if they can’t afford to pay the difference when an accident occurs. For example, say you have $15,000/$30,000 bodily injury coverage and $15,000 property damage coverage. You get into an accident that is your fault with two vehicles a five year Honda Accord and two year old Chrysler 300. There are three people in the Honda and one person in the Chrysler. All have minor injury but are brought to the hospital and the person driving the Chrysler stays overnight for observation. Their bills will run over your $30,000 maximum for Bodily injury and the person driving the Chrysler will have individual hospital cost of more than $15,000. What does that mean? Once your coverage is used up you will be responsible for the rest. With hospital cost as expensive as they are that could mean a very costly bill to you. This doesn’t even take into account the amount of property damage that needs to be paid out. Since you hit two cars the damage for both comes out at $19,000. That is another $4,000 out of your pocket. The worst part of the whole thing was you thought you had full coverage and that it didn’t matter what happened. Full coverage only means that you have liability coverage, comprehensive and collision coverage but your limits on liability are the most important. Make sure they are set properly.

I would suggest never having coverage less than $100,000/$300,000 for bodily injury and $50,000 property damage with even higher coverage recommended. The cost to go from $15,000/$30,000 to $100,000/$300,000 or even higher shouldn’t be more than a couple of hundred dollars a year at most. I would rather spend a couple hundred dollars more per year than be stuck owing thousand due to medical bills for a person that I injured in an accident. When talking with your insurance agent always get quotes with higher liability limits so you can compare the different prices between coverage. If you need to off set cost a little and you are getting full coverage consider having a higher collision deductible, but insurance cost savings is another topic to be written about later.