Auto accidents can happen to anyone, and when they do, the financial consequences can be severe. The question is—do you have enough liability coverage to protect yourself? We’ve previously discussed state minimum liability limits and why they’re often not enough in prior blog posts. In this blog post, we’ll focus on how to determine the right amount of coverage for your situation by breaking it down into four key factors.
1. Assess Your Risk Factors
Your driving habits and lifestyle play a big role in determining your risk level of causing an accident and how much auto liability coverage you need. Some factors that can increase your risk of being involved in an accident include:
- A long daily commute
- Driving in high-traffic areas
- Owning multiple vehicles
- Having teenage or inexperienced drivers on your policy
If any of these apply to you, your chances of causing or being involved in an accident are higher. With more exposure comes a greater need for increased auto liability coverage. Higher limits help ensure you’re financially protected in the event of a costly accident
2. Consider Potential Accident Costs
It’s easy to underestimate the actual costs of a severe accident. Medical expenses, vehicle repairs, and legal fees can quickly add up to you being responsible for hundreds of thousands of dollars. Many drivers carry only the state minimum liability coverage limits, which may not be enough to cover these costs.
For example, if you cause a multi-car accident with serious injuries, the medical bills alone could exceed $100,000. If your bodily injury liability limit is only $25,000 per person, you would be responsible for paying the remaining balance out of pocket. Choosing higher liability limits can prevent you from facing devastating financial consequences after an accident.
3. Evaluate Your Assets
When choosing where to set your auto liability coverage limits, it is important to consider your personal assets. If you’re at fault in a major accident and the damages exceed your policy limits, you could be sued for the difference. This means your home, savings, investments, and other valuable assets could be at risk.
To protect yourself, total up the value of your assets and compare them to your current liability limits. If your assets are worth significantly more than your coverage, it may be time to increase your limits to avoid potential financial hardship.
4. Review Insurance Recommendations
The previous three points should point out why a good, knowledgeable agent is worth the money. Find someone you trust, that knows their stuff and will propose to your policies that will protect your finances. Personally, regarding personal auto liability coverage limits, despite Georgia’s state minimum liability requirements, I will not write less than a 100/300/100 policy, which includes:
- $100,000 per person for bodily injury liability
- $300,000 per accident for bodily injury liability
- $100,000 for property damage liability
This level of coverage at a minimum will provide significantly more protection than state minimum requirements and can help safeguard your finances in the event of a serious accident. While increasing your liability limits may slightly raise your premium, the added protection is well worth the investment. If an umbrella policy is needed or desired, higher limits will likely be required by your insurance carrier.
Final Thoughts
By evaluating your risk factors, potential accident costs, and your total assets, you can make an informed decision about your auto liability coverage. Don’t wait until it’s too late—take the time to review your policy today and ensure you have the right protection in place. If you’re unsure about your coverage needs, I am more than happy to review your current policy and put together a comprehensive proposal to better protect you.
Drive safe and stay protected!
Authored by: Brandon A. Carlson, CWCA
