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Auto Insurance Liability Limits: How Much Do You Need?

Here’s an interesting tidbit about auto insurance many people don’t know: bodily injury liability coverage is the most important type of car insurance to have and, often, the least expensive. How much liability coverage is enough, and how can you tell?

Bodily injury liability insurance protects you and your assets in the event you cause a car accident and injure or kill somebody else. If the other party sues you for their injuries and wins, your liability insurance will pay the damages up to your coverage limits. If you don’t have liability insurance, or enough, the courts can—and will—seize any assets you own.

Bodily injury liability auto insurance is required by law in virtually every state. The coverage limits required by law, however, may not cover your needs. For example, in Maine, the minimum required bodily injury liability coverage is $50,000/$100,000. What that means is that the policy must cover at least $50,000 in liability for each person injured and at least $100,000 per accident.

But what happens if you own a home worth $200,000 and you are found responsible for injuring somebody in a crash and ordered to pay them $100,000 in damages?

This minimum bodily injury liability insurance only covers you for $50,000 for any one person. You will be responsible for another $50,000 in damages, even if it means the court has to put a lien on your house. Furthermore, you could be responsible for these damages if you lend the car to a friend or family member and he or she causes the accident.

Therefore, it’s important to buy bodily injury liability car insurance that will cover at least the value of your assets. In this case, you should have limits of at least $200,000/$400,000 ($200,000 per person, $400,000 total).

Often, bringing your auto insurance liability coverage limits in line with what you need will only cost you a hundred or so dollars per year—well worth it if the unthinkable happens and you have assets to lose. It is a good idea to compare auto insurance quotes from multiple companies using the same coverage selections to see which company can give you the most savings.

Need to revisit your auto insurance? Curious if you’re paying too much? Get a no-obligation quote in just minutes online from State Farm® Insurance Company.

Published or updated on January 7, 2009

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About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.


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  1. Thank you for this insightful article, I may have to change my insurance coverage.

    -Dan Malone-