Car insurance coverage limits

[Sojourner]

I'm in the process of shopping my auto & homeowners insurance around for competitive quotes, and I realized that I actually don't have a good handle on how much liability coverage I should have for things like property damage and bodily injury. The default numbers that come up for most online car insurance quotes are:

• $50,000 for property damage (the max insurance will pay if I damage someone else's property in an accident)
• $50,000/$100,000 for bodily injury (for paying someone else's medical bills if I cause their injuries)

Are these reasonable amounts? Is there some sort of metric I should be using to determine what my coverage limits should be, based on my net worth, etc.? FYI, I do not carry an umbrella policy (and, yes, I know I should).

I believe I've read on this forum that many of us here max out the liability coverages on auto & homeowner's insurance, which is usually a requirement for carrying an umbrella policy. Is this something I should be doing, too—maybe even, especially—since I don't have umbrella coverage? Would it be "penny wise, pound foolish" to go with the default coverages listed above, to save a few bucks?

Thanks in advance for any feedback and advice.

 

[COcheesehead]

Do you have or want an umbrella policy? Sometimes you have to max out or increase the auto limits to then be eligible for an umbrella.
Our auto and umbrella policies are relatively cheap. I look at it as peace of mind.

 

[scrabbler1]

I'd say the $50k PD is fine. But I think the $50/$100 BI is a little low. Remember, BI also includes pain and suffering, not just economic losses such as medical, wage loss, etc. You should go up to at least $100k/$200k BI.

From my working days in the actuarial field, I saw that most people had at least $100k/$200k BI.

 

[VanWinkle]

I'm in the process of shopping my auto & homeowners insurance around for competitive quotes, and I realized that I actually don't have a good handle on how much liability coverage I should have for things like property damage and bodily injury. The default numbers that come up for most online car insurance quotes are:

• $50,000 for property damage (the max insurance will pay if I damage someone else's property in an accident)
• $50,000/$100,000 for bodily injury (for paying someone else's medical bills if I cause their injuries)

Are these reasonable amounts? Is there some sort of metric I should be using to determine what my coverage limits should be, based on my net worth, etc.? FYI, I do not carry an umbrella policy (and, yes, I know I should).


I believe I've read on this forum that many of us here max out the liability coverages on auto & homeowner's insurance, which is usually a requirement for carrying an umbrella policy. Is this something I should be doing, too—maybe even, especially—since I don't have umbrella coverage? Would it be "penny wise, pound foolish" to go with the default coverages listed above, to save a few bucks?

Thanks in advance for any feedback and advice.

How many other vehicles on the road are worth more than 50K? That doesn't even address the building or tractor trailer that can be damaged in an accident. Minimum of 100K for PD and 250-500K for BI would be appropriate for anyone with a net worth higher than 250,000. The cost for these coverages is very reasonable. I would prefer higher limits for PD, but few companies offer higher PD coverage.

I worked in Auto claims for over 23 years.


VW

 

[OldShooter]

Do you have or want an umbrella policy? Sometimes you have to max out or increase the auto limits to then be eligible for an umbrella.
Our auto and umbrella policies are relatively cheap. I look at it as peace of mind.

This. I can't remember a time when I have not had an umbrella. The umbrellas specify the limits required on underlying coverage. Even if you don't want an umbrella, the numbers you get when asking about one would probably be a good reference point.

 

[Sojourner]

I'd say the $50k PD is fine. But I think the $50/$100 BI is a little low. Remember, BI also includes pain and suffering, not just economic losses such as medical, wage loss, etc. You should go up to at least $100k/$200k BI.

From my working days in the actuarial field, I saw that most people had at least $100k/$200k BI.

Thanks. This is more or less how I was thinking of it, too. Comfortable with $50k PD but feeling like $50k/$100k is a bit low for BI.

It is, essentially, an actuarial problem, as you alluded to. How likely is it that I'd ever be involved in an accident where I caused over $50k in property damage? I'd guess those odds would be extremely low. But with medical costs what they are (exorbitant), the odds of being in an accident where someone needs more than $50k of medical care are much, much higher. I personally know of three cases in my extended family where medical costs due to car accidents were in excess of $100k.

 

[scrabbler1]

The increased limits curve for PD is fairly flat at higher limits, so if you wanted to up that limit to $100k, it won't cost you a lot. I don't know if any insurance companies off limits in between, such as $75k.

 

[athena53]

What would be the consequences if you caused $300K of bodily injury in an accident and you had $50/100K liability? That's the question you have to answer. If you're judgment-proof (up to your eyeballs in debt, no equity in your home, 401(k) protected form creditors), then $50/$100 may be OK for you. If you have assets they can come after, get higher limits. Like many here, I have an umbrella policy (currently $3 million) to protect my IRAs (which CAN be attached by creditors), my after-tax savings and the equity in my home.

Required limits by state are a joke in many places (way too low given the injuries and average accident can cause). It's hard to get them increased because the higher costs might make more people go without coverage.

And, while you're at it, make sure you load up on uninsured/underinsured motorists coverage because if Joe Sixpack runs into you he'll have minimum limits if you're lucky.

 

[Sojourner]

OK, based on the replies so far and what I've read in previous threads on the subject, I think I'm finally ready to jump on the umbrella policy bandwagon (and the higher liability coverage that entails). Have been meaning to for some time, so no sense putting it off any longer. While I hate the thought of paying for yet more insurance, I know it's the prudent thing to do in my situation.

Thanks!