Liability coverage is the coverage for bad things that happen to other people because of you.
It could be in an auto accident where you've hurt other people or it could be someone getting hurt at your home. Insurance policies can pay for the actual medical expenses, lost wages, and “pain & suffering”.
COVERAGE LIMITS
But your policy will only cover you up to the coverage limits that you purchase. Often times people purchase low limits because they want to save money but in actuality it can cost a ton more money.
WHY? Because if you're in a liability claim and you don't have high enough coverage limits, YOU’RE gonna pay the rest out of your own pocket. Tens of thousands of dollars that you wouldn’t have had to spend if you purchased higher limits.
So what kind of liability limits should you have on your insurance policies?
AUTO INSURANCE COVERAGE LIMITS
Auto insurance coverage is oftentimes set up as split limit coverage. I suggest you have at least 100K/300K/100K split limit coverage. That means $100,000 of coverage per person in an auto accident, $300,000 of coverage altogether for injuries in an auto accident, and $100,000 of coverage for property damage to other people's vehicles.
So 100K/300K/100K is absolutely the lowest I would ever let anyone have for coverage limits. I suggest carrying 250K/500K/100K. That means you have $250,000 per person for injuries in an auto accident, 500,000 altogether, and $100,000 for personal property coverage.
Now you can put a personal liability umbrella on top of that and add more liability coverage which is a great idea but definitely 250K/500K/100K on your auto policy is where to set your auto liability limits.
HOMEOWNERS INSURANCE COVERAGE LIMITS
For your home policy I would suggest a $500,000 liability limit with at least $5,000 of medical payments.
So take a look at your own insurance policies and see if your coverage is up to speed. If it's not, make sure you call your insurance agent and get it fixed.
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