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Why should I purchase more than the state required minimum limits of liability coverage?


Most states require car owners to carry auto insurance, and most have a required minimum limit of liability insurance that drivers must purchase.   Many people choose to purchase the minimum state required limits in order to save money on their insurance.  Bad idea!  As a rule, these minimum required limits are often way too low to protect individuals in the event of a serious accident.


An auto insurance policy includes several different kinds of coverage.  The coverage that is required by state law is liability.  Liability is what protects you if you are found to be responsible or “liable” for an accident and are forced to pay damages to the injured party. This includes liability for bodily injury and property damage. The minimum that you are required to carry varies by state, but that minimum would likely not be enough to protect you and your assets if you were to be involved in a serious accident.   With today’s escalating costs of medical care, it would not take long to deplete a bodily injury limit of $30,000 per person.  What if more than one person is injured?   Hospital bills and medical expenses for more than one person could be well over the policy limit. 


So how do you know how much insurance you need?  The amount of liability coverage you carry should be high enough to protect your assets in the event of an accident.  Add up the dollar values of your house, your cars, your savings and investments and that will give you a good idea of what liability limits you need to purchase.  Remember, insurance companies are only obligated to pay damages up to the limit of coverage that you purchase.  If damages exceed the limit of liability on your auto policy, then you are responsible for paying the difference out of your own pocket.   







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