A common phrase I hear when talking to clients is “I have full coverage”. While you may have the key coverages on your auto policy, that is no guarantee you have all the coverages, or the level of coverage you need to properly protect yourself. Our belief is you should “Understand your coverage…before you have a loss”. While we always recommend that you speak to a licensed professional, we recognize that it is not always easy to reach someone that can explain your policy in easy-to-understand terms. This is the first of a 4-part series to learn how to assess if your current Auto insurance meets your needs.
In this article, we will discuss Bodily Injury liability coverage. This is the coverage you have if you cause an accident and are responsible to pay for another person’s injuries. If you injure someone in an accident, you are responsible to pay for the injured person’s medical costs, lost wages, any resulting disability, and pain and suffering. Depending on the severity of the injuries, these amounts can be significant. If you don’t have enough insurance to cover the judgement against you, your wages can be garnished, and you can be forced to sell assets to meet the judgement. Ensuring you have the proper level of insurance is the best way to protect yourself.
Bodily Injury Liability is usually the first coverage listed on your auto policy and will look like the sample below.
Bodily Injury Liability $100,000 per person/$300,000 per accident
The first number ($100,000) is the maximum amount coverage you have for injuries you cause to a single person. The second number ($300,000) is the maximum amount of coverage you have for injuries caused to all people in a single accident. Neither of these coverages pays for injuries you may have sustained.
When assessing how much coverage you need, we recommend looking at how much you have to protect. If you have a high salary and significant assets, you should consider higher levels of coverage. Most insurance companies offer at least $250,000 (per person) and $500,000 (per accident). The additional cost to increase to these higher levels is not significant. If you want higher limits, you can also add an umbrella policy. (see our recent post about umbrella coverage). We also offer a free online calculator to help you determine how much of a financial exposure you would have to a large liability loss. Additionally, we offer complimentary reviews and are willing to answer any questions you have about your coverage.