Your auto insurance liability coverage is the most important element of your auto insurance policy. In fact, it is the only auto insurance coverage that’s mandatory in every state. Simply put, the insurance definition for liability coverage is legal protection for you when you are legally obligated to pay for an injury to someone else or their property. Most people can tell you what their deductible is off the top of their head or how much they pay each month for their insurance policy. However, few can tell you how much liability coverage their policy has. Therefore, this blog will aim to help you identify the importance of auto insurance liability coverage and what the recommended insurance coverage for liability would be.
“Most people can tell you what their deductible
is off the top of their head or how much they pay each
month for their insurance policy. However, few can
tell you how much liability coverage their policy has.”
Liability coverage breaks into two major coverages. Firstly, bodily injury liability is coverage for when you are legally responsible for an injury you caused in an accident. For example, you were sending a quick “I’ll be there soon” text when you drifted into the other lane, caused the other vehicle to swerve into a median and break their arm. Even a minor injury can rack up some serious medical bills. Most people wouldn’t be able to pay out of pocket without being financially unstable. If someone had been seriously injured, the person who caused the accident and would be legally responsible and financially devastated if they didn’t have coverage. For that reason, every state requires bodily injury protection. Typically, you will see this coverage as a split limit. Most auto insurance bodily injury liability policies will break the bodily injury liability into a per person and per occurrence dollar amount. The first is the maximum amount of money they will pay out in the event an individual is injured. The second is the total they will pay out for an accident.
The second element of liability coverage is property damage liability. When you are at fault for an accident, you are responsible for the damage done to the other vehicle. This coverage is required on all auto insurance policies but different states allow for different amounts of coverage. Some people confuse this for “full coverage,” which just means coverage for bodily injury/ property damage liability as well as coverage for their vehicle in an accident when they are at fault. Property damage liability insurance does not include their vehicle. You need to carry comprehensive and collision coverage if you want coverage for your vehicle.
Now that we have a better understanding of what liability limits cover. Let’s look at some of the options here in VA that you might see for bodily injury and property damage liability. Remember these limits of coverage are the most the insurance company will pay out in the event of an at fault accident.
$25,000/$50,000/$20,000 – This is the minimum legal coverage allowed. Every policy in VA carries at least this amount of insurance liability. This insurance coverage is not comprehensive. Remember the first number is if you injury someone and is the maximum amount the insurance company will pay. The second number is the total for bodily injury liability they will pay out for an accident (In insurance they call this the aggregate.) The last number is the property damage liability. $20,000 in coverage isn’t very much considering the average cost of a vehicle purchased across the U.S. in 2014 is over $30,000. In VA, it is not uncommon to be driving next to a vehicle worth well over $60,000. If you carry minimum insurance coverage on your auto policy be sure not to get into an accident with a Mercedes, BMW, Lexus, Acura, Tesla, or any higher end Toyota, Honda, Ford, Chevy and basically any other vehicle that was made in the last two years because if you do you will find yourself coming out of pocket for the difference. At Bridge First Insurance, we won’t write policies with the minimum insurance liability because we know how insufficient it is and any agent writing policies like this are doing a disservice to this client.
“At Bridge First Insurance, we won’t write policies
with the minimum insurance liability because we
know how insufficient it is and any agent writing
policies like this are doing a disservice to this client.”
$50,000/$100,000/$50,000 – This is the next level coverage up from the state minimum requirement. We will occasionally write a policy with these limits if the client really insists but even here you are susceptible to paying large sums of money out of pocket. The insurance company is not going to pay more than the limits of the policy. They aren’t going to find it in the goodness or their heart to cover the full amount of damage when you didn’t want to pay a few more dollars for quality coverage. This level of insurance is still low but better than the state minimum requirement.
$100,000/$300,000/$100,000 –This level of coverage includes sufficient coverage for most accidents. If you are a renter, making an average salary who wants to make sure they are properly protected this is the coverage we recommended insurance for you. The $100,000 for bodily injury and the $100,000 for property damage will encompass most accidents you come across. Although, this isn’t the top level of coverage this is good coverage. The best part is that this superior coverage usually only costs about $100 more annually than the lowest limit of coverage! I would say that this is the average insurance policy limits I see in Virginia.
$250,000/$500,000/$100,000 – This is the bodily injury liability limits we recommend for almost everyone but especially homeowners that have some assets. The more you have, the more you have to lose. If you seriously injury someone you could be looking at your assets being liquidated to pay it. With this level of coverage you are properly protected. Additionally, this level of bodily injury liability coverage makes you eligible for a personal catastrophe policy, commonly called an umbrella policy. These policies extend a lot of coverages but when we are talking about auto insurance they extend your bodily injury and property damage limits by an additional $1,000,000 or more. In the most extreme scenarios like someone is killed in an accident you caused your coverage has that additional $1,000,000 bringing your coverage to $1,250,000. That is comprehensive protection.
In a time when it is easy to get wrapped up in naming your own price or just shopping for the cheapest option online it is important to have an independent agent who can still advise you on the importance of quality coverage. Chances are you won’t be in an accident that maxes out your insurance liability limits but for the few were it does happen it is life changing. Every single one of them would go back and say that they would have paid in the couple extra dollars a month to be better protected. What is the point of paying for auto insurance if when you have an accident, need the protection but didn’t get enough coverage?
Speak with a Bridge First Insurance Agent today! (571) 249-3857
Previously on the Blog:
Jack has achieved success in the insurance industry through a consultative and honest approach to clients. He designed this approach around educating clients on important coverage and allowing them to decide what policy would best fit their insurance needs. In 2013, Jack and co-founder Dave Zappacosta, established Bridge First Insurance, as an independent insurance agency operating in Virginia, DC, and Maryland.