Auto insurance is a crucial aspect of owning and driving a car. It not only protects you financially in the event of an accident, but it is also a legal requirement in most states. However, choosing the right amount of liability coverage can be confusing.
In this blog post, we’ll explore what liability coverage is and how much auto insurance you really need.
Understanding Liability Coverage Limits: How Much Auto Insurance Do You Really Need
What is Liability Coverage?
Liability coverage is the portion of your auto insurance policy that pays for damages and injuries you cause to other people and their property in an accident. It’s important to note that liability coverage does not cover damages to your own vehicle or injuries you sustain in an accident. Instead, it covers damages and injuries to the other driver, their passengers, and their property.
Liability coverage is typically broken down into two categories:
Bodily injury liability: This covers medical expenses, lost wages, and other damages you may be responsible for if you cause an accident that results in bodily injury to another person.
Property damage liability: This covers damage to another person’s property, such as their car, fence, or mailbox.
How Much Liability Coverage Do You Need?
The amount of liability coverage you need depends on several factors, including:
State requirements: Each state has its own minimum liability requirements. For example, in California, drivers must carry liability coverage of at least $15,000 per person for bodily injury and $5,000 for property damage. However, these minimum requirements may not be enough to cover all of the damages and injuries you may be responsible for in an accident.
Your assets: If you have assets, such as a home, savings account, or retirement fund, you may want to consider purchasing more liability coverage than the state minimums. This is because if you cause an accident and the damages and injuries exceed your liability coverage limits, you could be held personally responsible for the remaining costs. Having more liability coverage can protect your assets and future earnings.
Your driving habits: If you frequently drive in high-traffic areas or have a history of accidents or traffic violations, you may want to consider purchasing more liability coverage. This is because you may be at a higher risk of causing an accident and being responsible for damages and injuries.
Your budget: Of course, the amount of liability coverage you purchase also depends on your budget. It’s important to find a balance between adequate coverage and affordable premiums.
In general, experts recommend purchasing liability coverage of at least $100,000 per person for bodily injury and $300,000 per accident, as well as $100,000 for property damage. However, this may not be enough for everyone. It’s important to assess your own situation and speak with your insurance agent to determine the appropriate amount of liability coverage for you.
Liability coverage is an essential aspect of auto insurance. It protects you financially in the event of an accident, and it is a legal requirement in most states. When deciding how much liability coverage to purchase, it’s important to consider your state requirements, your assets, your driving habits, and your budget. By understanding your coverage needs and working with a trusted insurance agent, you can make sure you have the right amount of liability coverage to protect yourself and others on the road.