What is Auto Liability Insurance and why do I need it
Is Auto liability insurance required to drive in the US?
Generally speaking, auto liability insurance is required in nearly every State in the US and some states allow a person to post a bond in lieu of insurance; typically, $10-25,000.
How much auto liability insurance am I required to carry?
Depending on the State it can be as low as 15/30 – $15,000 per person and $30,000 aggregate or total liability coverage up to 50/100 – $50,000 / $100,000 in other states.
Bear-in-mind these are the State minimums and the insurance company will only pay up to the limit of any policy you choose. Example: if you are involved in an accident and you are found At-Fault and the individual you caused bodily injury sustained medical expense that exceeded your limits ($15,000 per person) you would personally be financially responsible for any amount over $15,000.
Most driver will take that into consideration when buying liability insurance considering the cost to increase coverages is generally only slightly higher.
What about property damage liability coverage?
Property damage coverage on a policy is the second part of the liability protection: 15/30/5. The third number you’ll see on liability insurance policy is the property damage, in this case using a California State minimum liability limit of $5,000.
Property damage is just that, damage to property of others up to the limit of your policy. Needless to say having only $5,000 in property liability coverage is not much especially if you do more damage than just backing into another vehicle.
Imagine totaling out someone’s new $50,000+ vehicle and you’ve selected the State minimum coverage, you would be financially responsible for anything over $5,000. Again, increasing property damage liability coverage is one of the least expenses ways to provide additional protection for a few dollars more.
How much auto liability insurance should I buy?
It depends – how much financial responsibility are you willing to take on if you get into an accident and you’re At-Fault?
Remember the other party may have insurance to pay to fix their vehicle if your policy limits fail to fully reimburse them, but that doesn’t stop their insurance company from coming after you. It’s called subrogation and it basically means they have the authority to take you to court to be refunded any monies paid and if it means garnishment of wages, foreclosure or liens on assets are all possibilities.
So, how much liability insurance do you need – As much as you can afford and/or feel comfortable protecting your financial future; We at Insurance Brokers Group like to call it your policy level peace-of-mind.
Should I consider a Personal Umbrella Liability policy in addition to auto liability?
The short answer is YES. Umbrella liability policies add an additional level of liability coverage on top of your current auto and property policies.
There are minimum liability limits you must have before the umbrella policy would kick in, e.g. $250,000 / $500,000 auto liability with $100,000 property damage coverage. At that point your $1,000,000 (PUP) personal umbrella policy would provide the additional protection giving you up to $1,500,000 in total liability coverage.
Depending on net worth and cost of insurance you can buy PUP policies ranging from $1 – $5 million for only a few hundred dollars per year.
Don't be that person that get their wages garnished for possibly life.
Can you image only having the bare minimum liability limits and are sued for several hundred thousands only to find out the insurance company will only pay up to the limit of your policy and no more.
A $1 million lawsuit and you only have $25,000 worth of liability insurance.
Guess what they will come after you for the remaining $975,000 until it's paid or you are dead.
For a couple bucks a month more you can have the peace of mind you're not going to lose your home, car and anything else including bank accounts and wages.
For additional information about auto liability insurance please call Insurance Brokers Group at 314-569-1010