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How Much Do I Need?
Liability coverage is the most important part of your auto insurance coverage. That is why it is important not to skimp on the amount of coverage you purchase. Typically, each state has a required minimum limit that you must carry on your insurance policy. The additional cost of higher limits is usually not that great and is worth the price if you can afford it. Liability coverage is expressed as a series of three limits, for instance $100,000/$300,000/$50,000, which means:
- $100,000 is the maximum amount the insurance company will pay for bodily injuries to any one person in an accident.
- $300,000 is the maximum amount the insurance company will pay for all bodily injuries for all people hurt in an accident.
- $50,000 is the maximum amount the insurance company will pay for damages to another person's property in an accident.
If the expenses exceed the limits, you are responsible for paying the remainder -- which could be very costly if it is a major accident with lawsuits. How do you decide which limits will provide you with adequate protection? Well, take a look at your net worth, a listing of your assets minus your liabilities. Make sure you try to select limits that will protect your assets.
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