Why Higher Liability Limits Could Be Your Best Bet When Buying Car Insurance
Picture this: you’re cruising down the highway, favorite song on the radio, feeling on top of the world. Suddenly, a fender-bender happens—not a huge crash, but enough to cause a headache.
You’re okay, but the other driver’s car is damaged, and they’re claiming medical expenses.
Your heart sinks as you wonder, “Will my car insurance cover this?”
If you’ve opted for minimum liability coverage, you might be in for a rude awakening. That’s why today, we’re diving into why purchasing higher liability limits for your car insurance is a smart move that could save you from financial stress down the road.
What Are Liability Limits, Anyway?
Let’s break it down.
Liability insurance is the part of your car insurance policy that covers damages or injuries you cause to others in an accident where you’re at fault.
It’s typically split into two main parts: bodily injury liability (BI) and property damage liability (PD). These are expressed as numbers like 25/50/25, which means:
$25,000 per person
$50,000 total paid per accident
$25,000 for property damage to others
Every state has minimum requirements for liability coverage, but here’s the thing—those minimums are often way too low to cover the real costs of an accident. Medical bills, car repairs, and legal fees can add up fast, leaving you on the hook if your coverage falls short.
Why Minimum Liability Isn’t Enough
I get it—nobody wants to pay more for car insurance than they have to.
Minimum coverage looks tempting because it’s cheaper upfront.
But think of it like buying a flimsy umbrella in a storm.
It might work for a drizzle, but when a real downpour hits, you’re soaked.
Here’s why sticking with state minimums can be risky:
Skyrocketing Costs: A quick trip to the ER can easily cost $10,000 or more. If you’re at fault in an accident and the other driver needs medical care, a $15,000 or $25,000 bodily injury limit might not cut it. You’d have to pay the difference out of pocket.
Expensive Cars on the Road: That SUV you accidentally rear-ended? It could be worth $50,000 or more. If your property damage limit is only $25,000, your bank account pays the remaining $25,000
Pro Tip: All Insurance companies have a subrogation department that will work on getting their money back from your checking account if your insurance policy limit not enough.
Lawsuits Are Real: If the other party sues for pain and suffering or lost wages, costs can spiral into six figures. Without enough coverage, your savings, wages, or even future earnings could be at risk
The average cost of a car accident claim involving injuries can exceed $100,000. Minimum coverage often leaves your bank account exposed to massive financial risks.
The Case for Higher Liability Limits
So, why go for higher liability limits? It’s all about peace of mind and protecting your financial future. Here’s why it’s worth considering:
Covers More in an Accident: Higher limits, like 100/300/100 or even 250/500/250, give you a bigger safety net. If you cause a serious accident, you’re less likely to pay out of pocket for damages or medical bills.
Protects Your Assets: Own a home? Have a savings account? Higher liability limits can shield your personal assets from lawsuits. Without them, you could lose everything you’ve worked hard for
Affordable Upgrade: Here’s the good news—bumping up your liability limits doesn’t always break the bank.
Increasing from 25/50/25 to 50/100/50 does not double your rate.
Prevents Financial Ruin: Imagine facing a $200,000 lawsuit with only $50,000 in coverage.
Higher limits reduce the chance of dipping into your own pocket or facing wage garnishment
How Much Coverage Do You Really Need?
There’s no one-size-fits-all answer, but a good rule of thumb is to choose limits that reflect your financial situation and the risks you face. Here are some tips to help you decide:
Assess Your Assets: If you have significant savings, property, or investments, aim for liability limits that protect those assets. A 100/300/100 policy is a common starting point for many drivers
Consider an Personal Umbrella Policy: For extra protection, look into an umbrella policy. It kicks in when your car insurance liability limits are maxed out, often providing $1 million or more in coverage at a surprisingly low cost
Think About Your Driving Habits: If you drive in busy urban areas or on highways with high-end cars, higher limits can give you extra security.
Talk to Your Agent: A licensed insurance agent can help you find the sweet spot between coverage and affordability. They can also bundle discounts to keep your premium manageable
A Real-Life Example
Let’s make it real.
Sarah, a 35-year-old teacher, opted for her state’s minimum liability coverage to save money. One rainy day, she accidentally rear-ended a luxury sedan, causing $40,000 in damage and minor injuries to the driver, who racked up $30,000 in medical bills.
Her 15/30/10 policy covered only $10,000 of the property damage and $30,000 of the medical bills, leaving her responsible for $30,000 out of pocket.
If Sarah had chosen a 100/300/100 policy, her insurance would’ve covered the entire claim, and she’d still have her savings intact.
The Bottom Line
Car insurance isn’t just about checking a box to meet state requirements—it’s about protecting yourself from life’s unexpected twists.
Higher liability limits might cost a bit more upfront, but they’re an investment in your financial security. The next time you’re reviewing your policy, think about what’s at stake. A few extra dollars a month could save you from a financial disaster down the line.
So, what’s your next step?
Call, email or click here to start a conversation about no longer buying the cheapest car insurance but using car insurance to protect your bank account.
