How Much Liability Coverage Should You Get For Your Car?
What Options Are Available?
There are a few different types of liability coverage for auto insurance. Common options include:
Bodily Injury Liability Coverage: If you are responsible for an auto accident, this coverage pays for the medical expenses of the other driver and passengers. If the injured parties have to take time off of work due to their injuries, liability coverage will also pay for lost wages.
Property Damage Liability Coverage: If you damage someone’s property or vehicle during an accident, this coverage pays for replacement or repairs.
Choosing The Right Coverage Amount
There are many things to consider when choosing the correct amount of liability coverage.
First, check the auto insurance laws in your state. In most states throughout the country, you are required to carry a minimum amount of liability coverage. If you do not have this coverage you are breaking the law. For example, in Vermont, the required legal coverage is at least $25,000 for one person, $50,000 for two or more persons killed or injured, and $10,000 for damages to property in any one crash.
Remember that the minimum amount of coverage required by law is just the legal requirement. In many cases the minimum amount of liability coverage will be inadequate. Take a moment to consider the value of a nice new vehicle. Most new vehicles are worth much more than $10,000. If a new vehicle is totaled as a result of an accident, and you only have $10,000 in liability coverage, you’ll have to find another way to make up the difference. Many vehicles on the road are worth $50,000 or more— meaning you could end up paying the extra $40,000 out of pocket. Car accidents can also damage buildings, city structures, or utility poles. Repairing these damages can be expensive. If you can afford more property damage coverage, you should probably invest in it.
You should also consider the costs associated with injuries. Hospital stays can get extremely expensive very quickly. In many cases, $25,000 per person or $50,000 for all the injured parties wouldn’t come close to providing enough coverage for any medical expenses incurred by injured parties. For these reasons and more, it is a good idea to consider your current financial obligations and limitations, and then consider purchasing additional auto insurance coverage. This will provide you with more protection in the event of an accident.
After considering the escalating costs associated with car accidents, you should also consider your budget, your driving habits, your lifestyle, and your risk tolerance. Not everyone needs the same amount of liability coverage.
To learn more about auto insurance policies and liability coverage, contact Taylor Moore Agency. An insurance agent can help you analyze your financial situation and your risks and then find a policy that meets your specific needs.