Why You Should Consider Higher Auto Liability Insurance Limits and a Personal Umbrella

Often people shopping for insurance are looking for the lowest possible premiums and the minimum limits allowed by law. What they may not realize is that carrying the lowest possible auto and home insurance liability limits, may leave their financial security at risk.

What are Auto Limits?

The liability coverage on your auto insurance policy pays for any bodily injury or property damages you may be responsible for after you’re in an accident. You may hear your insurance agent say, “your current auto limit is 50/100/50.” The three numbers in your auto limits represent the maximum amount your insurance company will pay as a result of an auto accident you cause. For example, here is how 50/100/50 limits break down:

  • 50 Bodily Injury Coverage-$50,000 per person for injuries
  • 100 Overall Maximum Coverage-$100,000 will be paid out for injuries total per accident
  • 50 Property Damage Coverage-$50,000 per accident will be paid for the damage you do to the property of others

Why Should I increase my Auto Limits?

Insufficient auto liability limits, can leave you paying out of pocket, for damages after an accident. If policy limits are exceeded after an at-fault accident, you are legally obligated to pay for any remaining damages. Your insurance company is only liable to pay up to the limit dictated by your auto policy. As a rule of thumb, the amount of liability insurance coverage you carry should be sufficient enough to protect your assets if you are found at fault in an accident.

Consider these recent claims paid out by our partners at Arbella Insurance:

  • A driver on their cell phone collided with an SUV which then ran off the road. The driver of the SUV sustained multiple injuries. The driver was found at fault for distracted driving, and the case resulted in a verdict for $3,400,000. If the responsible driver had limits of 50/100/50 then the maximum amount their insurance company paid for injuries was $50,000. A judgement for 3.4 million dollars, leaves the driver responsible for paying the remaining 3,350,000 million dollars in damages.
  • A pick-up truck hits a motorcyclist from behind. The cyclist claims neck and back injuries and it awarded a $510,000 settlement. The driver of the pick-up truck is found at-fault, if he has limits of 50/100/50, his policy would pay a maximum of $50,000 for injuries and he is responsible to come up with the remaining $460,000 to cover the cost of the settlement.

Additional reasons to increase your auto liability coverage:

  • You have a teen driver on your auto insurance policy: teen drivers represent a higher risk of accident due to their lack of driving experience.
  • You own a home or other properties: If you’re found at-fault for an auto accident where the judgement exceeds your policy limits, you must pay the remainder out-of-pocket which could compromise assets such as your family home or vacation property.
  • You have multiple drivers on your auto policy: Every additional driver on your auto insurance policy increases your risk of accident.
  • You participate in a carpool: If you help out on a regular basis by driving your children’s friends to and from school, or you reduce your carbon footprint by driving a carpool to work, your total exposure for injuries in the event of an accident is increased.
  • You drive a large truck or SUV: Larger vehicles have the potential to cause more property damage and/or more bodily injury in the event of an accident.

McSweeney & Ricci recommends carrying minimum auto liability limits of 250/500/250 and purchasing additional protection in the form of a personal umbrella insurance policy.

What is a personal umbrella policy?

An umbrella policy is an extra layer of liability insurance that kicks in after your regular policies, such as your homeowners or auto insurance, have reached their limits. While the highest available liability limits are typically 250/500/250, an umbrella policy has a maximum limit of $5,000, 000. Adding an umbrella insurance policy to your existing coverage is more affordable than you may think. For instance, a $1 million dollar umbrella policy can cost less than $300 annually.

While increasing your liability insurance limits and adding a personal umbrella, costs more than bare minimum coverage, it can end up saving you money in the event of an accident. In today’s world, even the smallest accident can result in a lawsuit with a large financial judgement. Your McSweeney & Ricci Account Manager will assess your level of risk and ensure your liability limits are sufficient to keep you protected.

When it comes to insurance, you need more than a great price. You need advice. With over fifty-five years of experience, McSweeney & Ricci offers the advice you can trust and affordable home insurance, car insurance, business insurance and more. For more information on auto liability insurance limits, adding a personal umbrella or any other insurance coverage, feel free to reach out to us at (844) 501-1359.

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