How to Determine Car Insurance Liability Limits

Auto insurance, bodily injury and property damage liability coverages protect you if you injure someone or damage or destroy someone's property.

Difficulty:

Moderate

Instructions

Things You'll Need

• Yellow Pages
• Telephones
• Car Insurance
• Cars

1. Learn the minimum liability limits required by your state.

2. Determine your assets. Insurance is meant to protect what can be lost in a lawsuit.

3. Think about the ages of the drivers in your household. Youthful drivers have more accidents resulting in lawsuits.

4. Realize you share liability for your children until they reach a specific age.

5. Consider your profession. If you work in the public eye or if you work in a profession perceived to have high income, you're likely to face larger lawsuits.

6. Understand that numerous cars on the road are worth more than the $25,000 property damage limits afforded by a basic policy.

7. Realize that you may be liable for damage to more than one vehicle if you cause a chain reaction accident.

Tips & Warnings

• Car leasing companies may require specific liability limits.

• If you use your car on the job, your employer may demand high limits.

• "25/50/25" means your insurance company will pay up to $25,000 if one person is injured or killed, $50,000 if more than one person makes a claim and up to $25,000 in property damage.

• Consider a personal liability umbrella policy instead of boosting your car insurance to the maximum limits if you have significant assets.