What do liability limits really mean?
It means if you are in a car accident and it is your fault, the most your policy will pay is $25,000 to any one person who is hurt. It also means that $50,000 is the most it will pay for all people injured. The $25,000 in property damage pays for damage caused to others property.
It’s Saturday morning, life is great and you carry state minimum limits. You are heading to lunch with your friends. You are running a little late so you decide to roll the dice and run the yellow light. You miscalculated and now the lanes are filling with cars. SMASH! You T-bone a small family. Mother, injuries totaling $48,000. Father, injuries totaling $20,000. Luckily, the children are OK.
How does your policy pay?
The father’s injuries are paid in total, $20,000. However, the mother is only paid $25,000 because that is the maximum limit payable to one person. Where does the other $23,000 come from for her injuries? YOU! In addition, they were driving a brand new $60,000 SUV. Your policy is only paying the limit of $25,000 for their damaged property. Where does the other $35,000 come from? Yep, YOU again… In this scenario, your insurance company would have paid $70,000 but you would still be responsible for the remaining $58,000, good thing those kids are ok, right? Unless you have $58,000 laying around, life wouldn’t be so great anymore.
Ok, I think you get the picture. Liability coverage is usually the least expensive part of the policy. Most companies offer limits up to $500,000 but some companies even offer limits over $1,000,000. I would recommend having no less than 4 times the state minimum limit—in our state that would be $100,000 per person, $300,000 total bodily injury, and $100,000 for property damage.
Call us today and let’s discuss your limits 601-636-5560.