Liability coverage is the type of protection that will help you cover medical bills and property damage costs resulting from an accident for which you are found at fault. Your minimum coverage requirements are determined by the state you live in, but you may choose to increase your limits depending on your personal needs. For example, if you drive a new Mercedes, you’ll probably want a higher limit to help protect your investment than someone who drives a used Toyota.
Your coverage limits are typically expressed in your policy as a 3-number ratio, such as 100/300/50. If you’re not an insurance expert, this ratio may seem like a complicated code. Using the example of 100/300/50, we’ll decipher exactly what the numbers mean.
The first two numbers in the ratio indicate your bodily injury liability limits. In the example, our limits are 100/300. That means you could receive a maximum payout of $100,000 per person in bodily injury coverage but only up to $300,000 per incident. That means if one person requires more than $100,000 in medical treatment, you may face some expenses out of pocket. If several people are injured in the accident and the total medical bills exceed $300,000, you could also face some costs on your own.
The third number in the ratio indicates the maximum amount you could receive in a payout to cover property damage. In this example, our limit of 50 means you could receive up to $50,000. If you cause an accident with an expensive vehicle or multiple vehicles or hit a building, you may require a higher limit. If you accidentally total a brand new Land Rover, for example, you may find yourself underinsured with a lower limit. A licensed agent is best qualified to help you set a limit that’s right for you.
It’s also important to remember that even if your policy covers all expenses, you will still be responsible for damage to your vehicle unless you have collision coverage. Even then, you’ll first have to meet your deductible before getting help. That’s why it’s important to work with a licensed agent in order to set proper coverage limits and a manageable deductible you know you’ll be able to pay out of pocket in an emergency.
Liability and collision coverage are only two types of protection you can get from an automobile insurance policy. Talk with your agent about what’s right for you. Among the things you consider are uninsured/underinsured motorist coverage – it’s required in some states – comprehensive coverage and several other types of protection. Smart choices now can save you a bundle if you get into a wreck later.
Source: AutoInsurance
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