Friday, July 8, 2016

Liability Insurance: How Much is Enough?

What is liability insurance? Liability insurance is what protects you when you cause damage to another person.  If you hit someone else’s car, your liability insurance pays to fix it.  If someone is injured in an accident that you caused, then liability insurance pays for their medical bills.

But how do you know the amount of coverage you need?  And what happens if you don’t have enough?  Here’s what you need to know:

There is a minimal amount of liability coverage that is required by the state in order to drive a vehicle.  But here’s the thing to keep in mind:  If you cause damage that exceeds that amount of liability coverage you have, then you’ll be responsible for the difference.   And if you can’t pay it, there could be a lawsuit in your future.

If you own your home or have additional assets, then you need more than the minimum amount of liability coverage. 

Here are some other risk factors:

Rental Property: If you own rental property, you need extra liability coverage.  If someone is injured on your property, then you could be held responsible.  Even a small dog bite could cause a problem if you’re not insured properly.

Teen or College Drivers:  If you have young drivers, you’ll want to have additional liability coverage, even if they are not on your auto policy right now.  Your college student may have their own coverage and live away from home, but if you’re still responsible for them and financially support them, you could be responsible for accidents that they cause.

Watercraft:  If you own a boat, jet ski, or other watercraft, then you’ll want more liability coverage.  Boat expenses and injuries can add up quickly and you’ll want to have plenty of protection in place.  

Umbrella Insurance: Additional coverage when needed

Another way to help ensure that you are covered, no matter what befalls you, is to purchase umbrella insurance. This is in addition to your other policies, and will cover you and your assets if your other coverages aren't adequate enough for the damages that were caused. These policies are relatively inexpensive, but can keep you from real financial hardship.

If, for example, you were liable for injuries to someone in an auto accident, and your liability coverage was not enough to cover the repairs and hospitalization costs, your umbrella insurance would kick in and cover you up to the maximum amount on that policy, above and beyond the limits of your auto insurance policy.

Likewise, if someone injured themselves on your property, and your homeowners limits were inadequate to cover the costs, that same umbrella policy would cover the damages that exceeded the homeowners policy, up to the limits of your umbrella coverage.

The best way to determine the amount of liability coverage you need?  Work with one of our local agents, who can identify all of your risk factors and explain each coverage fully.  You can’t get that from an automated call or form!  Call SAV-ON today at 888-867-2866 to review your policy and get a quote.