Is raising my auto policy liability limits a good idea?


Raising the liability limits of your Personal Auto policy is always highly advisable, especially if you fear you might not have adequate liability coverage in the event of an accident. This is a very reasonable step as it gives you much more security and minimizes the risk of you having to pay if you are found liable for bodily injury or physical damage in an auto crash.

Types of Auto Insurance Liability Limits

The limits of liability specify the maximum damages that the insurer will pay per accident. Here are two common ways of determining the limits of liability:

  1. A lot of people buy their Personal auto policies with split limits in which you are expected to select three limits: one limit for the maximum the auto coverage will pay for bodily injuries to a single person, another one - for injuries caused in one accident, regardless of the number of people involved, and a third one - for property damages in one accident.

    Split limits are usually represented in the following way: 50/100/250, where 50 stands for $50,000 per person for injuries, 100 - for $100,000 for injuries per accident, and 250 - for $250,000 for damage to property.

    If you choose the split limit option, make sure you select per-person coverage of at least $250,000. Many insureds fall in the trap of believing that they have more split limit coverage than they actually do. Imagine that you cause an accident in which the driver of the other vehicle gets serious head injuries. The jury finds you at fault and you have to pay the other driver $100,000 for bodily injury. You feel lucky since you have a 50/100/250 split limit liability coverage. The bitter truth is that you will have to pay the driver an extra $50,000 because you have set the limit per person you injure to $50,000.

  2. One way to avoid such misunderstandings is to opt for a single-limit liability auto coverage instead.

    Single limit liability covers both injuries and personal property damages you might cause in one accident, regardless of the number of people involved. The least amount of single limit coverage you should purchase is $300,000 to $500,000.

In both cases you are advised to buy additional liability coverage if you find you are inadequately insured: you will be amazed at how little it will cost you to raise your auto coverage liability limits! An extra hundred in premiums can raise your liability limits with $200,000 and spare you many headaches in the future.

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