Liability insurance is arguably the most affordable and the most important insurance to protect your family and your assets. It is also the coverage you don’t want to have to use, ever. Liability coverage is not coverage that will make payment to YOU. Liability provides protection to other people for damage that you cause to others or their property.
Auto liability insurance is the most familiar form of liability. The state requires that you carry at least the minimum limits of liability insurance if you are going to license and drive a car on public roadways. Each state’s requirements are different. For this article, we will be referring to the State of Nebraska’s requirements. Current requirements: the owner of the vehicle must maintain at least $25,000 per person/$50,000 per accident bodily injury liability and $25,000 for property damage liability.
Let’s first consider property damage. In all reality, $25,000 property damage can be used up very quickly. If you are at fault in an accident where a vehicle is totaled, you might have enough coverage. However, if that vehicle is a new vehicle or even a used vehicle less than five years old, $25,000 is not going to go very far. What if it is a multi-vehicle accident, or an accident that involves a semi-truck with cargo, and maybe there is also damage to fences, buildings, or poles? That $25,000 property damage limit is for the WHOLE accident, not each item damaged in the accident. What happens if the damage is over the $25,000 minimum you have on your policy?
Now, let’s consider bodily injury. If you have had to go to the ER lately, had to be transported by ambulance, had even minor surgery, MRIs, CT scans, or overnight hospital stays, you know that $25,000 WON’T go very far. If you are at fault, and the vehicle or vehicles you hit have more than two passengers, your per accident max of $50,000 is shared with all the injured people. Hopefully, you have been fortunate enough that you’ve never seen the bill for a helicopter ride! Guess what happens when the bodily injury limit is used up?
Personal liability is liability coverage you have on your home or renters’ policy. In the event you are found to be negligent in the injury of someone else, your insurance will help to defend you, but will also pay for the liability damages up to the limit on the policy. Guess what happens if you are found liable for $500,000 worth of damage and you only have $100,000 on your policy?
Well, guess what… YOU will be held responsible when you don’t have ENOUGH liability coverage. YOU will have to pay for the amounts over the limits on your policy. Your assets can be seized, and future wages can be garnished. Fortunately, protecting yourself is relatively inexpensive. The difference will probably cost less than a dinner out. Protect your assets and review your liability limits today! Ask your agent to give you a quote for higher limits of liability.