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What limits of Liability should I have?

By March 19, 2024No Comments
Auto Insurance - Family Driving to a Vacation Destination with Kids in the Back of the Car

Determining the appropriate liability limits for your auto insurance and adding an umbrella policy requires careful consideration of multiple factors. In particular, knowing the minimum liability coverage requirements established by your state is important. However, these requirements may not fully protect your assets in the event of an accident. Therefore, it is recommended that you analyze your assets and budget to determine the appropriate limits for your liability exposure.

Liability coverage is not just a legal requirement; it’s a crucial safeguard if you are found legally responsible for an accident. If damages exceed your coverage limits, you may be held personally responsible for paying the difference, which can have severe financial implications. Therefore, it is important to have adequate liability coverage limits to safeguard your assets in the event of a lawsuit.

Insurance experts suggest liability coverage limits of at least 250/500/250. This means a minimum of $250,000 in bodily injury liability coverage per person, $500,000 in bodily injury liability coverage per accident, and $250,000 in property damage liability coverage per accident. However, these are only general guidelines, and your specific needs may vary depending on your income, net worth, and assets.

An umbrella insurance policy can provide extra protection beyond your existing home and auto insurance policies. An Umbrella Policy can help protect you financially in case of a lawsuit or claim that exceeds the limits of your primary insurance coverage. Consider an umbrella policy if you have significant assets or a high risk of liability. However, the decision of whether to get an umbrella policy ultimately depends on your individual circumstances and needs. 

Ultimately, the responsibility of determining the appropriate liability limits for your auto insurance policy lies with you. It’s a task that requires careful analysis of your individual needs and circumstances.