Is Your State Minimum Auto Liability Coverage Really Enough?

Most states require you to have a minimum amount of auto liability coverage. However, you have to wonder if the minimum amount actually represents an amount that can help if you ever really need it. Liability coverage protects you from financial hardship and risk, while protecting others around you as well. Is your coverage enough to do that?

What Liability Insurance Covers

Liability insurance exists to cover damage to another person's property if there's an accident. It also covers injuries someone may sustain from an accident. It doesn't cover you; it protects you from liability. States set minimums to make this type of coverage obtainable for drivers of all economic standings. However, that minimum amount doesn't benefit all drivers of all economic standings.

Minimum Coverage Can Run Out Quickly

State minimum coverage typically covers the fallout from smaller accidents. The occasional fender bender may not stress your minimum liability coverage. Unfortunately, anything beyond that can max out the coverage limits. When that happens, the onus of footing the bill can fall on the vehicle owner.

This can become a real issue for someone with a lot of valuable assets. Once such a person exhausts their insurance coverage, the rest of the payments will likely come from those assets.

Keep in mind that damages from an auto accident can easily rise to hundreds of thousands of dollars. If the state minimum only covers about 50k, then an accident can devastate someone's estate. Assets can become forfeit, wages can become garnished, and life can become very difficult.

In addition, you should understand that it's the vehicle owner, not the driver that typically must face a judgment. If you let someone else drive your car, and they cause an accident, it's you and your assets that are on the line.

Pay Close Attention to Your Liability Coverage

The more assets you have, the more you should pay attention to your liability coverage. You should discuss just how much liability coverage you should consider with an insurance carrier.

You don't have to overdo it, but you do need to have enough coverage to protect your assets. The greater the value of your assets, the greater the chance you will have to give some or all of those assets up to satisfy a judgment.

Insurance carriers also tend to have options that can expand your liability coverage in many ways. These umbrella options may cost less, or come as parts of larger insurance packages that include different types of specific coverage. To learn more, contact an insurance agency such as Northeast Insurance Agency.