Often, people who buy insurance are looking for the lowest possible premiums and the minimum limits allowed by law. What they may not realize is that having the lowest possible auto and home insurance liability limits can put your financial security at risk.
what are automatic limits?
Reading: What does 50 100 insurance mean
The liability coverage in your auto insurance policy pays for any bodily injury or property damage you may be responsible for after an accident. You may hear your insurance agent say, “Your current car limit is 50/100/50.” The three numbers on your car limits represent the maximum amount your insurance company will pay as a result of a car accident that you cause. for example, this is how the 50/100/50 limits break down:
- 50 bodily injury coverage: $50,000 per person per injury
- 100 overall maximum coverage: $100,000 will be paid for total injuries per accident
- 50 property damage coverage property: $50,000 per accident will be paid for damage you do to the property of others
Why should I increase my automatic limits?
Insufficient automobile liability limits can cause you to pay out of pocket for damages after an accident. If policy limits are exceeded after an at-fault accident, you are legally obligated to pay any remaining damages. Your insurance company is only responsible for paying up to the limit dictated by your auto policy. As a general rule, the amount of liability insurance coverage you have should be enough to protect your assets if you are at fault in an accident.
Consider these recent claims paid by our partners at Arbella Insurance:
- a driver on his cell phone collided with a sport utility vehicle which then went off the road. The driver of the truck sustained multiple injuries. the driver was found guilty of distracted driving and the case resulted in a $3,400,000 verdict. if the at-fault driver had 50/100/50 limits, then the maximum amount his insurance company paid for injuries was $50,000. a $3.4 million judgment leaves the driver responsible for paying the remaining $3.35 million in damages.
- A pickup truck rear-ends a motorcyclist. the cyclist claims neck and back injuries and awarded a $510,000 settlement. the truck driver is at fault, if he has 50/100/50 limits, his policy would pay a maximum of $50,000 for injuries and he is responsible for getting the remaining $460,000 to cover the cost of the settlement.
Additional reasons to increase your auto liability coverage:
- You have a teen driver on your auto insurance policy: Teen drivers pose a higher risk of an accident due to their lack of driving experience.
- You own a home or other property: If you are at fault in a car accident where the judgment exceeds your policy limits, you must pay the rest out of pocket, which could jeopardize assets like your family home or vacation property.
- You have multiple drivers on your auto policy: Each additional driver on your auto insurance policy increases your risk of an accident.
- participate in a carpool: if you regularly help take your children’s friends to and from school, or reduce your carbon footprint by driving a carpool to work , your total exposure to injury in the event of an accident increases.
- you drive Like a Large Truck or SUV: Larger vehicles have the potential to cause more property damage and/or more bodily injury in the event of an accident.
mcsweeney & Ricci recommends carrying minimum auto liability limits of 250/500/250 and purchasing additional protection in the form of an umbrella personal insurance policy.
what is a personal general policy?
An umbrella policy is an additional layer of liability insurance that kicks in after your regular policies, like your auto or homeowners insurance, have reached their limits. while the highest liability limits available are typically 250/500/250, an umbrella policy has a maximum limit of $5,000,000. Adding an umbrella insurance policy to your existing coverage is more affordable than you think. for example, a $1 million blanket policy may cost less than $300 a year.
While increasing your liability insurance limits and adding a personal umbrella costs more than the minimum coverage, it may end up saving you money in the event of an accident. In today’s world, even the smallest accident can result in a lawsuit with a large financial judgment. you mcsweeney & ricci’s account manager will assess your risk level and ensure your liability limits are sufficient to keep you protected.
When it comes to insurance, you need more than a great price. you need advice with more than fifty-five years of experience, mcsweeney & ricci offers the advice you can trust and affordable insurance for home, auto, business and more. For more information on auto liability insurance limits, adding additional personal protection, or any other insurance coverage, please feel free to contact us at (844) 501-1359.