Auto Insurance Liability Limits…. What is Enough?
In the great state of Ohio, as well most other states, there is a law that declares everyone must have some form of financial responsibility if you have a drivers license. The vast majority of us satisfy this law by purchasing auto insurance. But what amount of coverage does the law require and is that really enough? (Link: State by State minimum limits.)
First of all, when does auto insurance liability coverage come in to play? When you have caused an accident and are responsible to another party for property damage or bodily injury that you have caused them, this is when your car insurance liability coverage will respond.
Again, speaking about Ohio, our minimum limits of liability are 25/50/25. Let me break that out for you.
The first number 25 refers to bodily injury per person and is represented in the thousands, $25,000 for one person’s injury. This is the maximum limit the insurance policy will provide. If the cost to treat that person for their injury is $25,000 or less, you are golden. But how likely is that?
The second number is 50. Again this represents thousands of dollars. This amount is the maximum amount of coverage your policy has in the event that more than one person is injured. First we had $25,000 maximum for one person, but here we see the maximum coverage available for all bodily injury is $50,000. For example… if there are 3 people injured in the vehicle you hit, you will have no more than $25,000 for any one individual and a maximum of $50,000 for all of them combined.
OK, now for the last number, 25. This number represents the property damage limit. Most of the time in auto accidents we are applying this coverage to another vehicle. However, property damage can be other things as well. Guard rails, stop signs, truck cargo or even the occasional building like on the evening news when we see that a vehicle has run through the front door of a convenience store. All these will be covered by the property damage coverage. Property Damage is not broken down into per person and per accident limits like bodily injury was, this coverage is for TOTAL property damage caused by the accident.
Now that you know what the limits mean and what the state of Ohio requires, we can discuss if these limits are enough for you.
Rule of thumb in the insurance industry is to “protect your assets.” If you don’t own much then the state minimum may be fine for you. But…. Do you own a house? How many cars do you own? What about toys, do you have a motorcycle, boat or a quad? Maybe you have a savings account or a retirement nest egg saved up. All these things need to be taken into consideration when considering what limit you will purchase as your insurance protection.
Looking at real world examples of Property Damage. Let’s consider the average cost of a new car today being about $30,000. That is only one vehicle and already you have exhausted your $25,000 limit if you end up doing so much damage they total out the car. But what if you hit a more expensive vehicle like an SUV or a Corvette. What if you cause damage to more than one vehicle? Heaven forbid you are responsible for running a semi off the road and damaging the rig, the trailer and the cargo. $25,000 doesn’t go very far in these cases and you may be left paying for the difference out of your pocket.
Now let’s look at bodily injury. $25,000 per person. $25k barely pays for a Careflight medical helicopter ride if one is needed. Whether by air or by ambulance, when the person you just injured gets to the hospital what do you think will happen? Will the medical staff there do a simple exam and send them home? Maybe. Or is it more likely that there will be extensive (expensive) tests, scans and overnight evaluations?
All said, what I am trying to get you to think about is what level of protection do you need from your auto insurance. It may not be good enough just to accept the state minimum. Insurance is not a simple game of having coverage or not. There are many things to consider, liability is just the tip of the proverbial iceberg. If your agent/company does not discuss limits with you then maybe you shouldn’t be doing business with them. Maybe you should seek advice somewhere else. A good agent will explain your choices and help you understand what each coverage is for.
Bottom line, don't just assume you should take the minimum coverage. There is more to insurance than just having it. Making sure you have the right type and the right limits of coverage is very important and shouldn't be taken lightly. I recommend you seek professional help from your local, independent insurance agent.
If you would like a free consultation with one of our agents at Taylor & Associates Insurance Agency, just give us a call at 937-962-2123 or CONTACT US HERE. We would be glad to help you understand your limits and to discuss the other coverage options of an insurance policy.
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Author: Bill VanBrederode is Agent/Owner at Taylor & Associates Insurance Agency in Lewisburg, OH. Bill has over 26 years experience in the insurance field.