“I know I need insurance. But I have no idea what some of the coverage really is.”
I hear that often in my agency. It makes sense, we definitely didn’t learn the ins and outs of insurance, in high school or beyond. That is what your agent is for. Take advantage of their knowledge. Let's go back to the basics for liability coverage.
Liability limits typically look like this on your policy, $25,000/$50,000/$25,000. In varying amounts of course. Say you do have that amount. Let's see how that breaks down.
- The first amount means up to $25,000 per person in medical coverage. This provides coverage if you were to injure others in an accident that you cause.
- The second amount means up to $50,000 per accident. Say you injured two people in an accident. The first person has $15,000 in medical expenses and the second person has $40,000 in medical expenses. That equals $55,000 total. Since your liability coverage is maxed out at $50,000, that leaves $5,000 that is not covered. You would be responsible for that $5,000 out of pocket.
- The third amount means up to $25,000 in property damage per accident. Say your foot pressed down on the gas, instead of the brake and you hit a building. If the damage is less than $25,000, everything will be covered. But if the damage is greater than $25,000, you would be responsible for paying the rest of the damages.
Check with your state to see what the state minimum liability limits are. That is what is required to drive on the road. The above limits are the state minimum here in my state of Oklahoma. As you can see, they may not be enough. What if you totaled someone’s luxury car? $25,000 certainly wouldn’t cover the entire cost of that car.
I hope these examples help paint a picture in your mind of what can happen. Now you can use that information to make an informed decision on what liability limits are best for you.