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  • Writer's pictureVincent Fuccilli

Why You Should Consider Higher Auto Liability Insurance Limits

Family with car and house

Getting auto insurance quotes for the lowest possible premiums shouldn't mean jeopardizing your coverage. Besides saving money, your goal should be finding the best coverage for your insurance needs at the most competitive insurance price.

If you are a homeowner and have assets, there is little to no reason why you should have the minimum coverage limits allowed by law (in New Jersey, state minimum are $15,000/$30,000/$5,000). To go one step further, having the minimum liability limits required to lease a vehicle, 100,000/300,000/50,000, may not be high enough coverage and could leave your financial security at risk.

What are Auto Liability Limits

The liability coverage on your auto insurance policy pays for bodily injury or property damages you may be responsible for after you're in an accident. You may be use to hearing the shortened version, such as 15/30/5 or 100/300/50 and having no clue what that means. The three set of numbers represent the maximum amount your insurance company will pay as a result of an auto accident you cause. For example, here is a breakdown of the common limits 100/300/50 :

  • 100 = Bodily Injury (BI) Coverage - $100,000 per person for injuries

  • 300 = Total BI Maximum Coverage - $300,000 total per accident may be paid for injuries

  • 50 = Property Damage (PD) Coverage - $50,000 per accident will be paid for damage you cause to the property of others.

Why Should I Increase My Auto Limits?

If you are in a serious accident in which you were at fault, insufficient auto liability limits can leave you paying for damages out of pocket. Once policy limits are exhausted after an at-fault accident, you may be legally obligated to pay for the remaining cost of a settlement.

Additional Reasons to Increase Your Auto Liability Coverage

  • You Own a home: If you don't have high enough coverage, and cause a serious accident, you will be personally responsible for any excess money owed. If you don't have the money to pay or refuse to pay, the claimant is going to be looking for your assets. This means you could end up losing your home or have your wages garnished.

  • Not a Big price difference: It is usually not as expensive as you think. Doubling your liability protection does not equate to you paying 2x as much.

250/500/100 - The Minimum Limits Required to Purchase an Umbrella Policy

If you take your financial future seriously, you should have no less than 250/500/100. In additional, this is the minimum liability limit allowed to make you eligible to purchase a personal excess liability policy (umbrella policy).

An umbrella policy is an extra layer of liability insurance that kicks in after underlying policy limits have been exhausted, such as your homeowners and auto policy.

Adding an umbrella insurance policy to your existing coverage is more affordable than you may think. For example, a $1,000,000 umbrella policy may cost you between $250 - $300 for the year (approximate rate usually for a 2 car, 2 driver, homeowner). This makes it the cheapest "most valuable" policy you can buy. Most valuable in the sense that it packs a punch and offers a whopping $1 million dollars in liability coverage for less than $1 dollar a day.

An umbrella policy may also cover a secondary home, rental properties, watercraft and recreational vehicles. You also have the option to go up to $5 million dollars in coverage, so companies may even go higher.

If you see the bigger picture, while raising your liability limits may cost you more money in the short term, it may save you a lot of money in the future.

Hope this Helps!

*The content contained in this blog is for informational purposes only. It should not be considered insurance advice since every client's needs and circumstances are different. Bergen Insurance Group, LLC makes no representation as to accuracy, completeness, currentness, suitability, or validity of any information on this site and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. All statements represent the sole opinion of the author and is provided on an as-is basis. For an actual description of all coverages, terms and conditions, refer to your insurance policy.

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