If you’re purchasing car insurance for the first time, it can be a little overwhelming. There are all types of coverage that you might need, and even subtypes of certain kinds of coverage. On top of that, you also have to figure out how much of each type of coverage you require. What a headache!
The best thing to do, of course, is sit down with a knowledgeable insurance agent and have them talk you through everything. However, it’s also a good idea to come to the meeting prepared with some information of your own. So, when it comes to liability coverage, just how much do you need?
Types Of Liability Insurance
First, it’s important to understand that there are two types of liability insurance: liability for bodily injury, and liability for property damage. These are separate, and you’ll need to make a determination about how much coverage you want for each of them.
Legal Minimums
You will likely have to have some minimum amount of coverage, according to the law. These laws vary by state, so you’ll have to check your own state’s policies with regard to this. However, in nearly all cases, you’ll want to carry quite a bit more than the minimum anyway, so this ends up being something of a moot point.
For example, many bodily injury liability minimums are between $10,000 and $20,000 per person or per accident. Property liability minimums also vary by state and also are usually ridiculously low.
Why Isn’t The Legal Minimum Enough?
Liability insurance covers the injuries or damages the other party in your accident sustains. If your insurance does not cover the total amount, then they can take you to court. And, if you were at all at fault for the accident, they have a very good chance at winning.
When it comes to something like collision coverage, which covers your own vehicle, not having sufficient coverage can be a huge inconvenience, and can leave you in the lurch when it comes to transportation. However, the effects are nowhere near as devastating as being caught with insufficient liability insurance.
That’s because if you get sued, the other party can come after everything you have. You could lose your vehicles, your home, your business—everything.
And when you consider just how low the minimum amounts are, it’s pretty obvious that they’re nowhere near enough. $10,000 for hospital bills in the event of a car accident is nothing. The average cost for a non-fatal disabling injury in a car accident is over $60, 000! And that’s the average, which means many claims are much higher.
Most people also pay a great deal more for their vehicles than the minimum amount of liability coverage, so if you get into an accident and total their car, you’re going to owe significantly more than your insurance can cover.
How Do I Choose An Amount?
You’ll want to converse at length with your agent about this, but as a general rule, the more you have at stake, the higher the amount should be. Naturally, even if you don’t have much, you don’t want to lose it, so there is a need to find a “sweet spot” between too low and too high. And don’t forget to shop around; you may find more coverage with a cheaper premium, which is almost always a good deal.
Any time you’re making decisions about your insurance coverage, it’s a good idea to do your own independent research and compare notes with an experienced insurance agent before you make a final decision.