State Minimum Liability Is Not Enough Coverage

State Minimum Liability Is Not Enough Coverage

March 17, 2022
Share |

Automobile Liability Insurance 

You are in the market for auto insurance and the only thing on your mind is "what's the cheapest option?" Typically, your lowest cost auto policies means state minimum coverage. While this may save you month to month it could cost you big time if you were involved in an accident.

When it comes to your auto insurance, state minimums are typically not enough and adding some additional coverage can be surprisingly affordable. 

Understanding Your Required Coverages

There are three components to vehicle liability insurance:

  • Bodily Injury Coverage Per Person
  • Bodily Injury Coverage Per Accident
  • Property Damage Coverage Per Accident

The minimum required liability coverage limits vary by state and can be shockingly low.  

  • Maryland’s minimum limits for example are $30,000 bodily injury liability per person, $60,000 bodily injury liability per accident, and $15,000 property damage liability per accident.
  • West Virginia’s required limits are $25,000 bodily injury liability per person, $50,000 bodily injury liability per accident, and $25,000 property damage liability per accident.
  • Pennsylvania’s are $15,000 bodily injury liability per person, $30,000 bodily injury liability per accident, and $5,000 property damage liability per accident.

Why The Minimum Required Limits May Not Be Adequate

 

Now let’s talk about a hypothetical claim scenario.  Let’s say you collide with a van carrying several passengers who suffer severe injuries.  In addition, the van, which is newer model, is significantly damaged. 

  • Under a Maryland policy with minimum coverage limits, the liability coverage would pay up to $30,000 per person for bodily injuries caused to people in the van but not more than $60,000 in total bodily injury costs for the incident. The maximum that would be paid for the property damage to the van would be $15,000.
  • Under a West Virginia policy with minimum coverage limits, the liability coverage would pay up to $25,000 per person for bodily injuries caused to people in the van but not more than $50,000 in total bodily injury costs for the incident. The maximum that would be paid for property damage to the van would be $25,000.
  • Under a Pennsylvania policy with minimum coverage limits, the liability coverage would pay up to $15,000 per person for bodily injuries caused to people in the van but not more than $30,000 in total bodily injury costs for the incident. The maximum that would be paid for property damage to the van would be just $5,000.

As you can see, in this claims scenario, it is very likely that there would not be sufficient insurance coverage provided under the auto policy to pay for the bodily injury and property damages.  You would be responsible for paying the excess cost of the claim over your liability coverage.  The other party, or parties, could come after you personally.  You might have to take out loans or mortgages.  You might have to sell assets, or a collector could take assets forcibly.  Future earnings could be garnished through court order and the motor vehicle administration could suspend your license until you are able to pay. 

Blue Ridge Risk Partners does not recommend purchasing state minimum liability insurance.  It simply does not provide adequate protection.  So how can you protect yourself?

  • Raise your liability limits. The cost to do so can be surprisingly affordable. 
  • Consider a Personal Umbrella Policy. A Personal Umbrella Policy is insurance designed to add an extra layer of liability coverage over and above other insurance policies, such as auto or home insurance.

Want to learn more or review your policy? Reach out to Paula Rhoderick today.