How Much Auto Liability Coverage You Need is Nothing to Guess At
If you finance or lease a car the lien holder will set the requirements for the amount of liability coverage you need. If you can decide for yourself how much liability coverage to carry there are some things you should know. The amount of liability coverage you need in Fort Lee NJ will differ from the amount of liability insurance Leesburg Fl. Different states require different levels of minimum coverage. Below is the average minimum coverage demanded by a majority of states.
- Bodily injury per person $15-$25 thousand
- Bodily injury per accident $30-$100 thousand
- Property damage liability $5-$25 thousand
Before buying auto insurance know the minimum acceptable coverage for your state. Still the question remains, “How much liability insurance do I need?”
Bodily Injury Liability
This portion of an auto insurance policy compensates victims of accidents the insured causes. Bodily injury liability reimburses drivers, passengers, pedestrians, and bystanders for their medical expenses, long term care, and lost wages. The insured and their passengers are not covered. The amount of bodily injury liability you carry should be based on your personal net worth. To determine your personal net worth you start by determining the combined value of your assets.
- Art, furnishings, jewelry, and collectibles
- Bank accounts
- Business holdings
- Cash value of life insurance policies
- Value of your car and home
Next, you will determine the sum of your liabilities. Liabilities are outstanding loans and credit card balances. The difference between the liabilities and assets is your net worth. A simpler approach is to carry the maximum liability coverage your budget will allow.
Property Damage Liability
Property damage coverage does not cover the property of the insured. Property damage covers damage or destruction the insured causes to the property of others. The damage and destruction of Federal property ie: mailboxes and property belonging to municipalities are also covered. Some utility companies will seek payment from a driver for replacement of poles.
In determining how much property damage coverage to carry keep in mind that property damage covers the replacement of a car. Kelley Blue Book places the mean cost of 2019 model year vehicles at over $37,000. Some insurance companies cap the amount of coverage they offer. With that in mind, property damage coverage should come as close as possible to the price of a new car.
This is Important!
The insured is responsible for the difference between their bodily injury and property damage coverage and the actual cost of injuries and damage the insured causes. One function of auto insurance is to protect the insured from losing some or all of their personal assets because of an accident. Make sure your liability coverage is equal to the value of your assets. By the same token, you want to avoid paying for coverage that exceeds the value of your assets.
Category: General