Insurance Policy Limits
It is mandatory that every driver carry Insurance in order to legally operate a vehicle within the United States, with each State having its own specific coverage limits to meet. While you are able to be on the road with these minimum limits, should you become involved in a serious collision you could suddenly find them to be deficient. Given this, individuals may want to consider raising their policy limits in order to secure the right protection for them.
What is a Policy Limit?
The liability coverage on your motor vehicle insurance policy pays out for any bodily injury or property damages sustained to others if you are at-fault for a collision. The terminology on your insurance policy might state that your limits are 25/50/25. The three numbers on your policy represents the maximum amount your insurance company will pay as a result of a collision you cause. For example, here is how 25/50/25 limits break down:
25 Bodily Injury Coverage - $25,000 per person for injuries.
50 Overall Maximum Coverage - $50,000 will be paid out for injuries total per accident.
25 Property Damage Coverage - $25,000 per accident will be paid for the damage you do to the property of others.
The Issue with Minimum Coverage
The majority of states will require their drivers to maintain at least a minimum liability coverage policy. While this varies by location, in the state of Kentucky this is $25,000 per person or $50,000 per accident.
What’s more, if you cause an accident and your liability policy limits are too low to cover the expenses, the other party might go after your assets in court. In order to protect yourself, it’s important that you think critically and consider how much coverage you might need to safeguard those assets.
Considering How Much Coverage You Need
While it is certainly tempting to pay out the lowest price you can for auto insurance, doing so can leave you exposed to serious financial risks. For the majority of drivers, it is recommended that you carry more than the minimum coverage unless you own an older vehicle and have no other property or assets to protect.
The higher you set your coverage limits and the lower you set your deductibles, the less you’ll have to pay of your own money following a claim. You will need to determine how much you can comfortably afford when setting your coverage limits. Raising your limits and paying more each month will allow you to get the most out of your investment.