Not having enough car insurance can be the difference between financial stability and financial ruin. Legally, the most important coverage you can carry on your car insurance policy is liability.
Unfortunately, in terms of consumer understanding, many people can’t quite grasp the concept of what this coverage is and how important it can be.
The main concern of many people is making sure their own injuries are covered and that their own car will be repaired if there’s an accident; however, liability is the coverage that will pay for someone else’s bodily injury and/or property damage in an accident if you’re responsible.
Trying to determine how much liability car insurance you should have can be a daunting task. For a start, it is important to know the minimum requirement of the liability car insurance in the state you are in as each state has its own minimum requirement.
Also, you need to understand that car liability insurance protects only the other person, his or her car and their personal belongings.
It does not cover you or your property as a driver and vehicle owner.
So how much liability auto insurance should you buy? Any good insurance agent will tell you that you should buy as much as you can afford and, while this is a good rule of thumb, it does not really get you any closer to an educated decision.
Once you have determined the minimum for your state, there are two things that should be taken into consideration in order to make that decision.
First, what does the minimum cover?
And, second, what other coverage is available and can you afford it?
Car insurance liability packages are shown as three numbers. The first two numbers refer to Bodily Injury Liability Limits. For example, 20/40 means coverage up to $20,000 for each person injured in an accident, up to a maximum of $40,000 for the entire accident.
The third number (as in 20/40/10) would indicate $10,000 worth of coverage for property damage. Property Damage Liability covers you if your car damages someone else’s property.
Usually it is their car, but it could also be a fence, a house or any other property damaged in an accident. It also provides you with legal defense if another party files a lawsuit against you.
That is why it is a good idea to purchase enough of this insurance to cover the amount of damage your car might do to another vehicle or object.
Once you have determined how much liability protection you need to get based on your state’s minimum requirements, it’s always a good idea to ask how much more it is for the next level higher. Very often, you can get significantly more coverage for very little additional cost.
However, if you don’t have that much cash, you can skimp on other kinds of auto coverage, such as damage to the car itself, and apply that savings toward injury liability coverage. After all, isn’t it better to worry more about the passengers and less about the cars?
Article contributed by NetQuote