Should You Raise Your Car Insurance Liability Limits?

Should You Cut Costs By Taking Minimum Liability Insurance?

Dummy in car accident with bicycle, representing car insurance liability coverage.

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When you purchase your car insurance policy, you may wonder if you should raise your liability limit to a higher amount than the minimum car insurance requirement. Understanding what car insurance liability covers, and what your risks are can help you make the decision. Often, people look to pay for the cheapest car insurance costs, but raising your car insurance from the minimum may not cost you that much more. Here's what you need to know about liability car insurance to help you decide if you should raise your minimum car insurance limits based on your needs.

What Does Car Liability Insurance Cover?

Liability car insurance covers damage to others caused by your use or ownership of a car. Liability car insurance is the most basic coverage on your car insurance policy. It is meant to protect you if you are found liable or responsible for something. For example, if you damage someone's car in a parking lot when you are opening your door, you are responsible for the damage, therefore it would be the liability that may cover the claim for the damage to the owner of the other car. Your car liability insurance will cover the damage to their car.

Another example of liability on your car insurance is if you are responsible for an accident or drive into someone's property, then you are liable. It is the liability insurance that will have to cover you. Liability requirements come from state financial responsibility laws, so each state has different requirements for the limit of liability.

Legal Defense Coverages and Liability Car Insurance

Another part of your car liability insurance policy is the legal defense coverage. Say you get sued because of something you are found liable for while driving. Then your car liability insurance coverage will also cover your lawyer and court fees.

The liability on your car policy may also provide coverage for bodily injury, per accident or per person. These limits and requirements vary by state.

What Are the Minimum Car Liability Limits?

The minimum liability car insurance limits are what is required by law in each state before one can drive. You are required to carry the liability car insurance limit from the state in which you live in. Unfortunately, many choose the legal minimum liability insurance to try and save money but this, in most cases, is a bad idea.

The legal minimum liability insurance limit to drive may not be the best coverage for everyone. For example, now that you know what liability car insurance is and how it works, let's say that you were sued for something you were liable for and you only obtained the minimum car insurance required for your state. That means whatever liability limit you chose, that is the most amount that you will get to use for any damages you were liable for any legal defense you may need. Considering how much it costs to have a lawyer and to go through court, do you trust your minimum car insurance liability?

Minimum Car Insurance Requirements Across the Country and Travel Considerations

If you ever travel or take road trips, you have additional liability concerns for your car insurance. For example, if you travel to Canada, you should have the maximum liability limit possible added to your car because the laws in Canada are different and it would be best to protect yourself and avoid being sued for amounts beyond your coverage.

Even if you aren't leaving the country, its a good idea to see how the requirements vary because they are good indicators of what each state has perceived as a risk. Bodily injury and additional coverages also vary due to the fact that the laws about liability and financial responsibility are different across the country. It is always a good idea to consider higher limits to fully protect yourself. 

What is the Best Amount of Car Liability Insurance for Me?

This obviously is a question that would need to be determined on an individual basis. It is best to work with a trusted insurance agent that understands your needs and budget. However, it is generally accepted among insurance agents that the state minimum policy limits are not enough.

What Do The Liability Amounts Mean on a Car Policy?

You will have to understand what the different limits are on your liability portion of your car insurance policy in order to see how much coverage you have on your policy. Your liability coverage is often expressed as a series of numbers, for example, 100/300/100. This would mean:

100,000 per person for bodily injury
300,000 per accident for bodily injury
100,000 per accident for property damage

Will Car Liability Insurance Cover Damage to My Own Car?

Damages to your own car are not covered by liability insurance. The damage to your own car is covered under comprehensive and collision insurance coverage. These are not included in liability coverage. You have to ask for them specifically. 

How to Get More Liability Insurance Coverage

Many consider adding an umbrella insurance policy for added coverage. Umbrella insurance is designed to give one added liability protection above and beyond the personal liability limits on homeowners, auto, and watercraft personal insurance policies. With an umbrella policy, depending on the insurance company, one can add an additional $1 to $5 million in liability protection (or more). This protection is designed to “kick-in” when the liability on other current policies has been exhausted.