How high should your liability insurance be?  That’s a wide open question, but one that needs to be seriously addressed.

You can’t expect to answer this question without the advise of an insurance professional.  There are many things to take into consideration.

  • Identify your assets and liabilities.
  • Identify your funds to protect those assets.

Your insurance agent should help you decide what is appropriate coverage to protect your assets and liabilities.  Keep in mind, the higher your limits for liability, the more likely your policy will pay all the damages in a claim.  If you have an accident and do not have sufficient coverage how would you pay for damages that exceed your policy limits?

You don’t want your wages garnished or a lien put on your home.

What about comprehensive and collision deductibles?  What deductibles should you have on your policy?

  • Higher deductibles will lower your premium and afford you to protect your assets.  The higher deductibles will increase the amount you pay out of pocket for a loss on your vehicle, but that’s the trade off for lowering your premiums and having higher limits for liability.  It is more important to protect against a loss against you and have high limits of liability than to pay out of pocket for your car repairs.
  • The question here is how much are you willing or capable of paying to save on premium?

If you finance or lease a car you are required to carry comprehensive and collision coverage.  As your car decreases in value or if you have an older car you may want to consider dropping this coverage.

The most important aspect of car insurance is protecting yourself from claims that are your fault.  Therefore, liability coverage becomes the most important part of protection for your assets and property.

If you have any questions call your agent to review your policy or contact this author.