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If your liability insurance coverage level is too low, your assets could be at risk.
Although your state may only require you to meet the minimum liability insurance limit, this coverage level may not cover you sufficiently in the event of a collision. In order to protect your assets, keep your liability coverage at or above 100/300/100. Let’s explore what these numbers mean, and how much liability coverage will cost with popular car insurance companies.
Liability insurance is the only state-mandated car insurance coverage. It covers damage you cause to other drivers — both to their property and any related medical expenses. Unless you live in a no-fault state, you must be determined at-fault or partially at-fault in order for your liability coverage to apply. Unlike collision and comprehensive coverages, there is no deductible for liability coverage.
Most often, liability coverage will look something like 50/100/50. This refers to the maximum dollar amount covered by your insurance, broken down by specific coverage type.
|50/||$50,000 total in medical coverage per person in the collision|
|100/||$100,000 total for the incident in bodily injury coverage|
|50||$50,000 in total property damage coverage|
These coverage limits are set by your insurance company. If you cause $57,000 in property damage and your limit is $50,000, you are responsible for covering the remaining damage out-of-pocket. If you do not pay, you can be sued. Your insurance company is only liable up to the limit dictated by your policy.
Because of this, you should keep your liability limits as high as you can afford. Most experts recommend purchasing liability (or excess via an umbrella insurance policy) in an amount equal to your net worth.
The highest commonly available liability limits are 250/500/250. An umbrella policy can have a maximum additional liability limit of $5,000,000.
Other reasons exist to increase your liability limits. Below are some considerations to keep in mind when determining how much liability insurance you need:
Using methodology outlined here, we got rates for an individual with 100/300/100 liability limits plus collision and comprehensive coverage. USAA offers the cheapest liability car insurance coverage.
|Insurer||Average Annual Premium|
USAA charges $523 for a standard six-month insurance policy — about $87 per month. If you do not qualify for USAA, GEICO is the second-cheapest option, at $107 per month. Depending on your individual driving profile, your premium could vary. Use our rates as estimates and begin your search for liability insurance with USAA and GEICO.
Although carrying high liability limits costs more, it can save you money in the long run. Not only will exceeding your limits leave you responsible for any additional costs, a history of low coverage is considered a risky driving factor by insurance companies. Any time your insurance company views you as a potentially risky client, you can expect a higher premium as a result.
If you’re looking for more information related to car insurance, see our additional articles below.