How Much Property Liability Protection Do You Need?
Your auto insurance liability coverage
If you’re found at fault in an accident, you’re likely on the hook to pay for damage you cause. That’s a huge financial responsibility. How do you know what kind of insurance you need and how much of it you should have?
Your auto policy’s Property Damage (PD) liability coverage pays toward the cash amount you would owe if there is a successful claim, lawsuit, or settlement against you based on accidental damage you or someone on your policy does to another person’s vehicle or other property.
What does it cover?
You’re covered for damage to various types of property, and for some accident-related service charges.
- Other vehicles – cars, trucks, motorcycles, bicycles, etc.
- Property in vehicles
- Structures – fences, sheds, houses, stores, etc.
- Municipal property – stoplights, streetlights, telephone poles, etc.
Your policy would pay to the limit of coverage. The goal is to have enough coverage so that you don’t have to take money out of your savings or assets to pay for the damage.
How much do you need?
Your state requires you to have a minimum amount of PD coverage. But we advise you not to assume that amount is adequate. Here’s why.
5 Best-Selling Vehicles1
Take a look at the average price of midrange models of these best-selling vehicles. “Best-selling” means you are apt to encounter a lot of them on the road – perhaps in an accident.
- Ford® F-150 XLT – $34,160
- Chevrolet® Silverado – $37,600
- Ram® Pickup – $44,290
- Toyota® RAV-4 XLD – $27,300
- Nissan® Rogue – $25,020
You should consider having enough coverage to ensure you can pay to repair, or even replace, a vehicle if you cause an accident that totals it. If you have only the minimum coverage your state requires (and some require as little as $10,000), you would likely have to pay $15,000–$34,000 out of your pocket to meet the restitution requirement against you.
Not too many people have that much cash to spare. If you do, you probably have a better use for it.
The cost of a replacing a vehicle you total is one reason to make sure you have adequate PD limits.
What else? Your liability isn’t limited to vehicle damage
If you’re like the unlucky driver in the photo above, you’d have to worry about the high possibility of a very large claim against you by the power company, by the municipality, and even by businesses that lost power because of the accident. For example, a restaurant that loses thousands of dollars due to food spoilage may have an enforceable claim against you. You may also be charged for police and fire response, the cost of the repairs to the electrical pole, road crew and service crew wages, etc. You’d probably also be responsible for the cost of replacing a stop sign, a light pole, or any other municipal property you damage.
If you hit a fence or building, you’ll be liable for that, too.
As you can see, minimum liability insurance limits aren’t something we recommend.
How to tell what you have
Your policy’s Declarations Page includes a liability section that states the coverage amount. If you’re not sure where to find it, call us at 800.227.2757. We’ll be happy to help you.
Our Risk Coaches™ are licensed insurance professionals who are trained to look at coverage from your perspective. They’re glad to help you navigate the often-perplexing world of insurance coverage. Contact your local Risk Coach professional or call us at 800.342.5342, Monday through Friday, from 8:00 a.m. to 8:00 p.m. ET.