How Much Liability Insurance Is Recommended for the Average Driver?

January 10, 2019

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

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 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.