How Much Liability Insurance Is Recommended for the Average Driver?

teen driver smiling while driving

Liability insurance is a type of car insurance protecting other drivers should you cause damage to their property or person. Most states require drivers to have this type of auto insurance in place. Yet, state minimums are usually very low. In some cases, they offer so little coverage that you still face significant exposure to risk. How much liability insurance do you need, then?

Know the Limits and the Risks For Liability Insurance

Some state requirements for liability insurance require just $10,000 worth of coverage. Many will up this to $20,000.

Now, imagine a single accident. You cause damage to another person’s vehicle. The vehicle repairs are not possible. The insurer totals that vehicle. Does that $10,000 or $20,000 required by law really cover the full cost of a new vehicle for that driver? In most cases, the answer is no. You might therefore have to pay the driver additional compensation.

You also have to factor in medical bills. Property damage to a third party’s property may also apply. As you can see, bare minimum coverage is typically too little to provide comprehensive protection.

What Is the Recommendation For Liability Insurance Then?

While there are some basic recommendations, it is also important to speak to your insurance agent. It is best to select coverage that fits the averages for your area. For example, the average damage in New York or California may be higher than someone in the Midwest simply due to the costs of repairs.

However, most car insurance companies recommend the following protections:

  • $250,000 for injuries per person.
  • $500,000 for injuries in total per accident.
  • $100,000 for property damage.

Again, you can and may wish to extend these numbers, if possible. Some drivers also wish to choose something in the middle here. It pays to take into consideration all of the risks.

Consider What They Could Get from You, Too

Another way to see the value of increasing your auto insurance liability coverage is to look at what you could lose.

Imaging an accident occurs, your insurance company pays out the maximum, and yet there are still losses from the other party. That party could sue you for the losses. Could you lose your home to pay off those costs? What if someone dies in such an incident? The losses for loss of life can be in the millions.

While this may seem scary, it is a reality. Having car insurance with enough liability protection is critical. Do not overlook the importance of purchasing enough protection.

FAQ’s About How Much Liability Insurance Is Recommended for the Average Driver?

What is liability insurance?

Liability insurance is a type of car insurance that covers damages or injuries that you may cause to other people or their property while driving.

How much liability insurance should I have as an average driver?

Experts recommend having at least $100,000 in bodily injury liability coverage per person and $300,000 per accident, as well as $100,000 in property damage liability coverage.

What happens if I don’t have enough liability insurance?

If you are found liable for an accident and your insurance coverage is not enough to cover the damages, you may be personally responsible for paying the difference.

Can I get liability insurance without collision or comprehensive coverage?

Yes, you can choose to only purchase liability insurance, although collision and comprehensive coverage can provide additional protection for your own vehicle.

What factors affect the cost of liability insurance?

Factors that may affect the cost of liability insurance include your driving record, age, location, type of vehicle, and coverage limits.

Is liability insurance mandatory in all states?

Yes, liability insurance is mandatory in all states except New Hampshire and Virginia, although these states have their own requirements for drivers.

Can I increase my liability insurance coverage?

Yes, you can increase your liability insurance coverage by purchasing a higher limit policy or adding an umbrella policy.

What is an umbrella policy?

An umbrella policy is a type of insurance that provides additional liability coverage beyond the limits of your primary auto insurance policy.

Can I be sued if I have liability insurance?

Yes, you can still be sued for damages or injuries that exceed your liability insurance coverage, although having insurance can help protect you from financial loss.

How can I find the best liability insurance policy for my needs?

To find the best liability insurance policy for your needs, it’s important to compare quotes from multiple insurance companies and consider factors such as coverage limits, deductibles, and customer reviews.

Understanding 100/300 insurance coverage

100/300 insurance coverage refers to a liability insurance policy with coverage limits of $100,000 per person and $300,000 per accident for bodily injury liability. This means that if you cause an accident, your insurance will pay up to $100,000 for each injured person’s medical expenses, but the total payment for the accident will not exceed $300,000. It is generally recommended for drivers seeking higher levels of protection, as it provides more coverage than the state minimum requirements.

Assessing the sufficiency of 50/100 liability insurance

A 50/100 liability insurance policy covers up to $50,000 per person and $100,000 per accident for bodily injury liability. While this is higher than the minimum requirements in many states (usually 25/50/25), it may not be sufficient for some drivers. Factors like your assets, potential legal costs, and the risk of expensive accidents should be considered when deciding if 50/100 coverage is enough for you. It is generally advisable to consult with an insurance professional to determine the appropriate level of coverage for your individual circumstances.

Comparing full coverage and liability insurance

Full coverage insurance and liability insurance differ in the extent of protection they offer:

    • Full coverage insurance typically includes liability insurance, collision coverage, and comprehensive coverage. This means that, in addition to covering expenses for others (like medical costs and property damage) when you are at fault in an accident, it also covers the repair or replacement of your own vehicle due to collisions, theft, vandalism, and other events.
    • Liability insurance, on the other hand, only covers bodily injury and property damage costs for other parties involved in an accident where you are at fault. It does not cover any costs related to damage or loss of your own vehicle.

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