How Much Liability Car Insurance Coverage to Buy?

Probably there is little doubt that making basic liability auto insurance coverage mandatory across the United States of America is a good thing for everyone involved. Drivers are free to insure own damages. However, they cannot be allowed to get behind the steering wheel without insuring against injuries and damages they may cause to others. Driving isn’t a right but it is a privilege that requires complying with rules of the road and insurance laws.

Does Liability Only Auto Insurance Make Sense?

If it was left up to individuals there is no question that many people would have covered their own losses first. Surprisingly, many people only buy a basic policy to start with and it can take a while before they start adding protection for their own interest. Certainly, there may be some people who believe insurance is total waste of money in any case, but they are in the minority. Most policyholders have already got a few answers to why do you need car insurance.

Probably, many people are focused on their first car a lot that they may not have paid much attention to insurance arrangements. They would have just asked for the lowest they have to get because they splashed most of the money on purchasing the automobile. This approach may be fine when you are a young person with barely enough wages and no family to worry about. When the vehicle is old as well, there may not be much of a need for more coverage. These are the times liability only auto insurance makes sense.

When Do You Need More Liability Car Insurance Protection?

large accidents and liabilitiesUsually, people start progressing in their jobs, meet a life partner and start accumulating wealth and buying expensive cars. These changes require a new look into auto insurance arrangements they made earlier. At this point, it is not hard to see the need to insure the car for damages and family members for injuries properly. You can take it further to have accident related loss of wages, limbs or life covers as well.

When people have more to lose they will want to buy more protection. The necessary arrangements can be made as the life progress. Or in some cases, people suddenly realize the need and start buying all sorts of insurance plans.

How Much Liability Car Insurance Is Enough?

According to experts, recommend car insurance liability limits are 100/300/100. Usually the best liability automobile insurance coverage limit available is 250/500/100. If you really want the best coverage money can buy some companies offer liability cover up to 500/500/300. Obviously higher coverage reduces the risk of losing your assets due to insufficient insurance protection. The price difference between a basic and very good level of coverage may not be huge as discussed below.

How Much Does Adequate Liability Auto Insurance Coverage Cost?

Another post answers how much is liability car insurance in your area on average? This post explains how the premiums are determined. Auto insurers can hold their prices firm for a basic liability vehicle insurance policy since they have the laws behind them. This part will be comparatively expensive for several reasons including the mandatory nature of the purchase. Another important reason is that even for the minor incidents these policies will have to be called into making compensations.

One of the well-kept auto insurance secrets is that doubling your liability limits doesn’t result in double the premium cost. Actually, you would be surprised to find out that substantial increase in cover will only increase your premium by about 10%. The problem is that most drivers are scared to increase their coverage because they assume the premium will just shoot through the roof. That is why you should always get quotes for different levels of protection and see before prejudging the outcome.

If the minimum coverage required is $50,000 there would be only few claims above this amount. So, the underwriting logic is that the risks are low even when the minimum cover increased 10 times to $500,000. For example, the first $50,000 coverage would cost motorists say $700 and they can increase it to $500,000 for only $100 additional premium.

Simply, the chances of additional $450,000 being called to cover third party losses is slim. However, the legaly required minimum coverage (of $50,000 in this example) is always on the line for claims. Most liability claims are below $50,000 and those small claims accumulate to become millions of dollars in losses for auto insurers. Even the cost of dealing with them is a large sum of money that increases the need to charge more for the initial portion.

Nonetheless, there is a possibility that you will cause substantial losses on a highway accident, for example. When you do not have much wealth to worry about, you may ignore this possibility. However, people with home, property, business assets or high salaries will be putting their own wealth on the line when they do not have sufficient liabilities cover.

When you cause injuries and financial losses to others they will not say “Oh well, his liability vehicle insurance coverage only cover this much”. They will go after whatever else you have got until they are fully compensated. Therefore, first thing you should consider is increasing the minimum coverage. They are set at barely enough levels by states to ensure affordability.

Uninsured Motorists Coverage as Part of Liability Coverage

Uninsured drivers are at 14% across the country and as high as 26% in some states. Therefore, it is hard to ignore the risk of being hit by one of them or be victim of a hit and run accident. If it is not required to be included in your state minimum car insurance coverage you should consider buying Uninsured/Underinsured Motorists Coverage as well at similar levels as your liability coverage.

Personal Injury Protection Cover

Next, the injuries to own and family members should be considered carefully. Who is going to pay for the medical expenses? Do you have a health insurance to cover them? Depending on the answers to these questions, motorists should consider arranging Personal Injury Protection which will include policyholders, family members and other passengers (if they do not have their own PIP). Personal Injury Protection is compulsory in No-fault states.

There is no point in covering the same risk twice as it can only be paid by one insurer. Therefore, you should check the costs of buying additional coverage under auto insurance policy or from a different line of insurance like health. You will probably need quotes for both lines.

Additional Car Insurance Coverage

You will definitely want to consider insuring the car especially when it is fairly new. Collision and comprehensive covers will deal with this need pretty effectively. Collision pays for crash related damages while comprehensive pays other losses like storm damage, flood, falling trees, theft and vandalism, except collision. There are a few packages including these components at a reasonable price.

Adding more coverage will increase the vehicle insurance premiums. However, a decent policy is an essential need for many households. You should take your time to have a look at your own circumstances and requirements and seek to get the ideal coverage at the lowest cost. In order to achieve this objective you will need to know how to save money on car insurance. So, stick around a bit, read one or two more posts and get a few quotes right here.

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