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How much auto liability insurance should you buy?

It is a fact: Everyone make mistakes. But mistakes with driving automobiles can mean severe injury or death.

One way to avoid mistakes with driving is to drive perfectly and safely 100% of the time.  That’s not possible and not all accidents may be your fault.  Some are unavoidable: Wrong place – wrong time. The most nightmarish would be a child running or riding a bike out from between two parked cars or a skate boarder at night.  Incidents like these can happen in New Bedford just as likely as any other town or city.  For such terrible accidents, the insurance companies often pay out the full limit of the auto policy – without a blink.

When mistakes are made and other people are hurt, most people would want their insurance company to pay out the full limit in order to in some way, compensate the injured person or family.  For the policyholder, there would be a sense of consolation, that they had bought a responsible limit of liability to compensate anyone for either the consequence of their mistakes, lapse of judgment or something unavoidable.

Even if you were found not at fault in an accident resulting in injury, having only low limits of liability insurance does not help the injured person at a time you wish you could help.  There is a sense of injustice that could haunt you if all you have is low limits and you could have – or should have, afforded more.

How much Automobile Liability insurance should you buy?

The limit of auto liability insurance you should purchase has nothing to do with the value of the vehicle.  An old junk car can cause as much bodily injury as a new expensive new luxury car. The decision of “how much?” liability insurance should involve the input of your New Bedford insurance agent.  Borden Insurance Agency, Inc. can help guide you in this important decision.

Discussions about limits of liability insurance usually refer to a “split limit”.  Example:  $20,000 per person/$40,000 per accident.  The first half of a split limit is how much “per person” a policy will pay and the second part is the most the policy will pay if more than one person is involved.

So how much liability should one purchase?  Often the split limit of $100,000 per person/$300,000 per accident is recommended.  But as the dollar shrinks and judgments or settlements become higher, this recommendation is generally becoming obsolete and being replaced by the limit of $250,000 per person/$500,000 per accident.  In addition, a Personal Umbrella liability policy should be considered for excess liability coverage.

Minimum or low limits are for people who have few assets or do not own a home. Additionally, high limits are needed if a person is due to inherit a large sum, or has good prospects of a high income as may be the case of a student in medical school or law school.  Jury awards may involve garnishing of future wages. So just because a person has few assets or savings at the moment, they may have good prospects for wealth in the future.

High limits on auto insurance will help protect your assets, creating a kind of shield between your legal exposure to an accident and all you have worked for – your home, savings, investments and future earnings.  Remember, there is a need beyond just protecting your assets. Those reasons alone are worth the extra dollars for higher limits.