Most states set a bare minimum requirement for liability insurance. However, this required minimum amount of auto insurance is rarely enough. It may be more valuable to you to increase your coverage to minimize any risks. But, how much coverage do you actually need? This may be a more complex question than you think.
Meet State Minimums
The first step to take is to purchase enough car insurance to meet your state's minimum requirement. This coverage protects other drivers. If you cause an accident or damage to another person’s property, these funds help cover their losses. It does not protect you, directly. However, most states only require about $25,000 in coverage. Whatever damage exceeds this value may be your financial responsibility. This is why state minimums are rarely enough.
Why Add More Coverage?
Before making the decision of how much extra liability insurance you should buy, consider the risks. Imagine a car accident in which you cause significant damage to another vehicle. The driver of that vehicle must go to the hospital for treatment. These steps alone – even in a moderate accident – can mean thousands of dollars in losses. In many situations, the losses can far exceed the state minimum required coverage. And, as noted, you may need to cover these losses. You could even face a lawsuit from the other driver to cover those costs.
How Much Coverage Do You Need?
The amount of coverage you need depends on a variety of factors. Where you live can be a concern. If you drive very often, this increases your risks of an accident as well. You may also want additional coverage if you have a few reckless driving convictions. This may mean you are more likely to speed or cause an accident again.
Most experts recommend at least $100,000/$300,000 in coverage. Some will recommend $250,000 in bodily injury coverage per person and $500,000 per accident. You may also wish to purchase $100,000 for property damage coverage. But, even here, the decisions are really up to you and the risks present.
It is best to work with your auto insurance provider to gain more insight into your options. Find out what the average claims are for liability losses in your area. Your car insurance agent can make recommendations that fit your budget, too. While state minimum requirements may not be sufficient for all of your needs, finding the right balance is important.