How Much Liability Coverage Do You Need?

If your liability insurance coverage level is too low, your assets could be at risk.

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How Much Liability Insurance do I need?

Simply put — you need as much liability insurance as you can afford. Selecting the bare minimum state limit leaves you vulnerable in the event you exceed your liability limits. If you exceed your liability coverage after an at-fault accident, you are legally responsible for the remaining damages to the other party.

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.

  1. What is liability insurance and why do I need it?
  2. How much is Liability Insurance? Average Rates by Company
  3. Per Occurrence Limit vs Split Limit
  4. Additional resources

 

Liability insurance

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.

Coverage Level

Details

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

 

What happens if you exceed your liability insurance limits?

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:

  • Do you have a teen driver on your insurance policy?
  • Do you insure multiple drivers on your policy?
  • Do you drive a larger vehicle, which could potentially cause more bodily injury or property damage in an accident?

 

How much does liability insurance cost?

Using a 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.

Insurer6-Month Premium
Allstate$1,011
Farmers$824
GEICO$645
Liberty Mutual$1,037
Progressive$900
State Farm$866
USAA$523


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, but a history of low coverage is also 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.

Get estimates for liability insurance today!

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Per occurrence limit vs split limit

Different policies and companies can structure their liability limits differently. A per occurrence limit is the most your policy will pay after one occurrence. For example, if you have a per occurrence limit of $50,000, that is all you will receive after an at-fault accident for the other driver’s bodily injury and property damage.

A split limit policy is more common and is what we described above. You will have separate amounts of coverage for your property damage and bodily injury. Generally, a split limit policy is more recommended that a per occurrence policy.

 

Additional resources

If you’re looking for more information related to car insurance, see our additional articles below.

 

 

Calculate how much car insurance coverage you need