Finance

How Much Liability Insurance Do You Need as a Driver?

How Much Liability Insurance Do You Need as a Driver?

When you become a driver, you are automatically held responsible for any accidents or damage that may occur while you are behind the wheel. That’s why liability insurance is so important, which will protect you financially if you are held liable for an accident. But how much liability insurance do you need?

Several states do not require drivers to have car insurance. These states include Arizona, Florida, Iowa, New Hampshire, and Texas. However, not carrying that coverage leaves you open to significant financial risk.

The answer to the above question depends on a few factors, including the legal requirements in your state and the number of assets (and monetary values) you have to protect. In most states, drivers must carry minimum liability auto insurance, typically covering property damage and medical expenses resulting from an accident. 

An Example Without Enough Insurance Coverage

For example, let’s say you cause an accident that results in $50,000 worth of damage to the other driver’s car. If you only have the minimum coverage required by your state, your insurer will only pay out up to $25,000, leaving the other driver with $25,000 to pay out of pocket.

Adequate Insurance Coverage Simplifies Things

If you have $100,000 worth of coverage, on the other hand, your insurer will pay a total of $50,000, and you will only be on the hook for your deductible (the amount you pay out of pocket before your insurance kicks in).

Coverage Increases Add to Your Monthly or Annual Costs

Of course, as your coverage limits increase, so does your premium (the amount you pay for insurance each month). That’s why it’s important to balance how much coverage you need and how much you can afford to pay. A good rule of thumb is to carry liability insurance that is at least equal to the value of your assets. This way, your assets will be protected if you are ever sued for damages exceeding your policy limits.

How to Save on Insurance Costs

Your insurance rates will rise if you protect several assets or purchase adequate coverage. There are several ways to reduce insurance costs from the other side.

Shop around for insurance rates

You may be able to find a lower rate by switching providers. Use an online comparison tool to compare several companies and policy options. You can make an informed and detail-centric decision on your best rates from those comparison tools.

Consider raising your deductible.

Everyone knows that car insurance is necessary, but that doesn’t mean it has to be expensive. There are a few simple things that you can do to make sure that you’re getting the best possible rate on your premiums. For starters, consider raising your deductible. This will lower the amount you have to pay out of pocket in the event of an accident, but it will also lead to a lower monthly premium. You can also save money by bundling your car insurance with other types, such as homeowners’ or renters’ insurance.

Increase your deductible.

Many people don’t realize they can save money on car insurance by increasing their deductible. By agreeing to pay a more significant amount in the event of an accident, you can lower your monthly premium and have some financial flexibility in case of an emergency.

Of course, making sure you can afford to pay the increased deductible before you make the change is essential. But suppose you are confident in your ability to budget and manage your finances. In that case, this could be a great way to save money each month so if you’re looking to cut costs, be sure to ask your insurance agent about increasing your deductible. You may be surprised at how much you can save.

Consider a higher liability limit.

Some insurers offer a higher liability limit at an additional cost. Make sure that you get enough coverage to protect yourself in the event of an accident.

By carefully reviewing your needs and budget, you can find the right car insurance coverage to protect yourself financially and minimize out-of-pocket expenses should an accident occur. With the proper knowledge, finding the most affordable insurance options is well within your reach.

Bundle your car and home insurance policies

One way to save money many people don’t think about is bundling their insurance. This means having more than one policy with the same company. For example, you could have your car and homeowners insurance with the same company.

Often, companies will give you a discount for bundling these policies together. This is because it’s easier for them to keep track of one customer with multiple policies than to keep track of multiple customers with one policy.

In addition, bundling your insurance can save you time and hassle because you only have to deal with one company for all your needs. So if you’re looking for ways to save money, bundling your insurance is something to consider. In addition, you’ll only have to deal with a single insurance carrier, which can make things, like your monthly budget, much simpler and easier to manage.

Liability May Not Be Enough

Liability insurance is essential for all drivers. Drivers should consider carrying at least as much insurance as they have in assets to protect themselves from being sued for damages exceeding their policy limits.

About the author

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Miller Willson

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