June 3, 2013
Automobile Liability Limits
Automobile Liability is the coverage that pays for bodily injury and property damage that you, your family, or a permissive use driver of your vehicle cause while driving your car. In the event you are sued, the liability will pay for any legal expenses and court costs that you may incur.
The minimum automobile liability limits required are $30,000 limit for Bodily Injury per person / $60,000 limit for Bodily Injury for the accident / $25,000 limit for Property Damage for the accident. The Bodily Injury limit is the amount intended to compensate the injured party for their medical bills. The Property Damage limit is to pay for physical damage to property that was damaged in the accident.
Why should I consider purchasing higher limits than those required by the state? Let’s take a quick look at what some medical costs are. The cost in a hospital is between $1,600 and $2,200 per day in Texas. This does not include physician charges, medical tests and treatments such as surgeries, therapy, lab work, etc. which can really escalate. Just the trip in the ambulance could be a $1,000, and an airlift could be over $10,000. The amounts can climb very rapidly, and the minimum of $30,000 per person doesn’t seem like enough.
From a Property Damage standpoint, the State requirement is $25,000. Considering that the average new car or truck price is now around $30,000, this could be a problem – especially in the event of a multi-car accident. What happens if the claims exceed the limits of liability coverage that I have? You get sued. Unfortunately, if the claim against you results in a court judgment that exceeds the amount of your liability limits, then you could have to pay the excess amount out of your own income or assets. If sufficient cash is not available, you may have to liquidate assets.
What should you do? Yes, there is a cost to increase the limits of liability on your automobile policy, however it may not cost as much as you think. Several sources recommend limits of $100,000/$300,000/$100,000. This may be enough, however in some cases, higher limits or a personal umbrella may need to be considered. If you would like to see what the cost would be for higher limits, give our office a call and we would be happy to review your coverage and offer alternative quotes for your consideration.
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