The Importance of Higher Auto Liability Limits

December 16, 2020

If you are involved in a car accident, you probably assume you are covered if you carry car insurance. Before you assume, though, you should know the property damage limits of your policy. Property damage coverage is required by most states. But, the average coverage required is just $5,000. In today’s day and age, that’s peanuts. What if you hit and totaled a car that was worth $50,000? That $5,000 is not going to get you very far.

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What Does Property Damage Coverage Cover?

Your property damage insurance covers some or all of the following:

  • Damage you cause to another person’s car as a result of the accident
  • Damage you cause to another person’s property (house, business, fence)
  • Legal fees that result from the damage you cause
  • Financial losses a business incurs as a result of being unable to operate due to your accident

As you can guess, these costs can get pretty high. You can typically secure property damage coverage for as much as $100,000 and it’s not a bad idea to do so. Of course, the higher amount of coverage will mean higher premiums, but it could be well worth the financial protection.

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Why You Should Carry Higher Property Damage Limits

You might think it’s better to save money each month on the premium. After all, what are the chances of you causing a serious accident? Unfortunately, you cannot predict the figure. You also cannot control the actions of others. What if you slip on black ice and drive into someone’s home? You obviously did not plan it, but now you caused the damage and you have to pay for it. If you don’t have the coverage, you would have to pay the difference between the insurance coverage you have and the cost of the damage out of your own pocket.

What happens if the person whose property you caused damage to decides to sue you? Now you have legal expenses and a lawsuit on your hands. Is it worth taking that chance? The premiums will not increase as much as you might think. For example, let’s say your state minimum required coverage is $10,000. You decide to opt for the $100,000 coverage. That’s 10 times the coverage, but that doesn’t mean your premium will be 10 times as much. It might only increase a few dollars.

The best thing to do is talk to your insurance agent and see what premium options you have. Talk about varying types of coverage and how much it would cost you in premium. You can then compare the premiums versus what it might cost if you were to cause serious damage to someone’s property and have to pay the costs out of pocket.

Property damage insurance is something that you want to give careful consideration to as the damages could get astronomical if you are not careful. Talk with your agent about the property damage limits they offer and what they recommend. Chances are that increasing your coverage will barely put a dent in your pocketbook, but it will provide you with the protection that you need.

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