By Chris Butsch • December 12, 2018
Auto insurance liability limits vary by state. State minimums can be around $200, while maximums can be $700. Here’s all you need to know about auto insurance liability limits.
Let’s say you’ve just read about 6 Reasons To Shop Around For Car Insurance Every 6 Months and are now filing for coverage with a new carrier. You input your make, model, and year, choose a sensible deductible, and are now asked about something called “liability coverage.”
What is liability coverage, how much do you really need, and how much does it cost? Read on to find out!
What is liability coverage?
Imagine a very real scenario where you change lanes during traffic without realizing that the lane next to you is all backed up. You smash into the car ahead, which plows into a lamp post. You and the other driver emerge OK from the smoky accordion of Plexiglass and steel, but his passenger is holding the back of her neck in pain.
Your insurance will cover your car, but who covers the damage to the other car? How about the lamppost? And who will pay the passenger’s chiropractor?
This is all what liability insurance is for. When you cause an accident, your liability insurance covers all of the expenses outside the damage of your own car.
Liability insurance covers two types of damages:
- Bodily injury. As the name suggests, this type covers the medical bills and emergency aid expenses of the others involved in the accident. It also covers their lost income due to time spent in medical treatment.
- Property damage. This type covers damage to cars and property such as fences, walls, lampposts, and Spider Man gorilla statues.
How much liability insurance do you need?
The answer, by law, is “some.” Most states require you to have minimum liability limits, which most vendors will make clear at the time of coverage purchase. However, these legal minimums typically aren’t enough to cover lawsuits or personal lost wages. Thankfully, some carriers like Allstate also offer personal umbrella insurance to cover these expenses as well.
Limits are generally expressed using three numbers. For example, 25/50/25 liability coverage means it will pay up to:
- $25,000 in injuries per person
- $50,000 in injuries per accident
- $25,000 for property damage per accident
25/50/25 coverage is also a common state minimum, while maximums are around 250/500/250. You may think you don’t need maximum liability insurance, but many in the auto industry recommend you simply max out your liability coverage. After all, do you really want to be financially liable for a multi-car pileup? Or rear-ending a CEO who claims $763,894 in lost wages? Or replacing Spider Man Gorilla?
Plus, liability insurance is so cheap, it may just be worth getting the maximum anyhow.
How much does liability insurance cost?
On average, auto liability insurance costs around $450 per year. State minimums can be around $200, while maximums can be $700.
If you hate the idea of paying an extra $500 for something you may never use, consider re-reading our article 6 Reasons To Shop Around For Car Insurance Every 6 Months, where you’ll learn how a simple phone call to a carrier can save you at least that much on your annual premiums.