As an insurance agent, I’ve had the opportunity to work with many clients who have differing views on the importance of having higher liability limits than state minimums. While state minimums can seem like a convenient option, they may not be enough to protect you in the event of a serious accident.
First, let’s understand what liability limits are. In simple terms, liability limits are the maximum amount of money that an insurance company will pay out to cover damages in the event of an accident that you are found responsible for. Each state sets its own minimum liability limits, which are typically listed as three numbers, such as 25/50/10. In this example, the numbers represent $25,000 for bodily injury liability per person, $50,000 for bodily injury liability per accident, and $10,000 for property damage liability per accident.
While these limits may seem like a reasonable amount, it’s important to remember that accidents can quickly become very expensive. If someone is seriously injured, medical bills can quickly exceed $25,000. Similarly, if you cause an accident involving multiple vehicles, $50,000 may not be enough to cover all of the damages. If you don’t have enough coverage to pay for damages, you may be held personally responsible and forced to pay out of pocket.
That’s where higher liability limits come in. By increasing your coverage, you can protect yourself from the financial burden of an accident. For example, if you increase your coverage to 100/300/100, you will have $100,000 in bodily injury liability coverage per person, $300,000 in bodily injury liability coverage per accident, and $100,000 in property damage liability coverage per accident. This may seem like a lot of money, but it can quickly be used up in the event of a serious accident.
In conclusion, while state minimums may seem like a cost-effective option, they may not be enough to protect you in the event of a serious accident. By increasing your liability limits, you can protect yourself from the financial burden of an accident and avoid the risk of having to sell assets to pay off the remaining balance. As an insurance agent, I highly recommend that you consider increasing your liability limits to ensure that you have adequate coverage.