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How Much Liability Coverage is Enough for Auto Insurance?

Monday, March 28, 2011 @ 06:03 PM
posted by admin

Liability is the main reason that we should carry auto insurance.


If you have a vehicle that is worth $20,000 and you don’t have collision coverage you could be out $20,000 if you total your vehicle.

But, If you hit someone else, and total their $20,000 vehicle then there could be a lot more at stake.

Property Damage Liability – Covers Damage to Others Property

  • What if you caused a vehicle to spin out of control and hit a building, or a bridge, or any other structure?
  • What if before it hit the structure it hit fiber optics box (cable box), fire hydrant,  or a light pole?
  • What if there were more vehicles involved in the accident or parked cars?

Personal Injury Liability – Covers injuries, pain and suffering, rehabilitation, death/dismemberment

It doesn’t take much speed to cause an accident that can create substantial injuries.

  • What if one or more people have to go to the hospital?
  • What if someone in the car had a pre-existing condition which created a much bigger injury (recent surgery, heart problems, back problems, etc)
  • Spinal cord injuries are caused by auto accidents 48% of the time. 99% of spinal cord injuries paralyze their victims with an average lifetime cost of $1.35 million
  • What if one or more people are fatally injured, or permanently injured?
  • What if there was a baby in the car?

 

Reality Check:

California Traffic Saftey Report Card

http://www.ots.ca.gov/OTS_and_Traffic_Safety/Report_Card.asp

Annual Report of Fatal and Injury Motor Vehicle Traffic Collisions

http://www.chp.ca.gov/switrs/

 

In the past 100/300/100 was considered the minimum coverage to have on your auto insurance if you owned a home or had any assets. This however has been recommended for over 30 years, and I don’t have to tell you how much things have changed in 30 years.

Did you know you could increase this to 300/300/200 for just a few dollars for the whole six months?  Just this little change could make a huge difference if there are any major injuries.  This allows you full access the $300k in liability coverage even if there is only one person in the other vehicle instead of just $100k.

The new MINIMUM liability limit on your auto insurance for anyone who wants to be protected in the event of an accident should be 500/500/500.  For those with good driving records this could be as little as $20 more per six months to increase to this coverage from 100/300/100.

If you don’t have enough money/assets  to pay for the costs you are liable for, up to 25% of your wages can be garnished in California.

Ultimately if you want to protect your assets you should have a $1 million – $2 million dollar umbrella policy to extend above the $500k provided to you by your auto insurance.  This will also extend above any other personal liability exposure such as your home, boat, atv, motorcycle, etc.  Umbrella policies start out at about $200 per year, and you can get a $2 million dollar policy for as little as $345 per year. If you have kids, extra cars, home, motorcycles, or boats, this cost goes up.   The higher your assets the higher liability

We also need to be responsible drivers and make sure we have the coverage needed to right the wrong.  Many people are injured by people who do not have sufficient coverage and are never compensated for their injuries.


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