Liability Insurance: A Necessary Evil
Let’s face it, just about nobody likes auto insurance. For most people, it’s a cost you’re forced to pay for something you never get anything from. Making matters worse, most people have no idea about what coverage they are paying for or what kind of options they have. For many, the only thing that matters is the cost. However, if you are involved in a collision, having the right type and amount of insurance can make all the difference. This post will address one of those types, liability insurance.
Liability insurance is designed to protect you if you are at fault for a collision. Every state has a minimum amount of liability insurance. In North Carolina ,it’s $30,000/$60,000. In South Carolina, it’s $25,000/$50,000.
These numbers indicate the most money the insurance will cover per person and then per accident. So under a $30,000/$60,000 North Carolina minimum limits policy, the insurance will pay a single person no more than $30,000 for their injuries and no more than $60,000 total for all of the people involved in the accident.
The main thing to understand is that you can be personally responsible for any amount of damages that are above your liability policy limit. So, for example, let’s say you look down at your phone for directions and the next thing you know, you’ve rear-ended the minivan in front of you. The impact wasn’t all that bad, but you find out a family of four was in the minivan. All four of those family members take an ambulance to the hospital. Even though thankfully none of the family members are severely injured, they have a combined total of $75,000 in medical bills. If you’ve ever received a hospital bill, you know it’s not hard for the charges to add up, so this is not all that infrequent of a scenario.
In our example, assume you have a minimum limits policy of $30,000/$60,000. With a minimum limits policy, the four family members have a total of $60,000 to split. The problem is that their combined cases are worth well over the $60,000 policy limits. However, your insurance will only pay the amount up to your policy limits, and the rest is potentially on you.
That means that the family of four could sue you for your assets to recoup money greater than the $60,000 insurance limits. If that happens, you could be found personally liable for any amount over your insurance policy. For most people, that is a situation they want to avoid.
Not having sufficient liability coverage is something that personal injury attorneys see nearly every day. With the high costs of medical care, it doesn’t always take a catastrophic injury to have a case worth much more than the insurance policy’s limits.
Therefore, if you have any personal assets or plan to have any assets in the future, you must shield yourself with a sufficient amount of liability insurance. Otherwise, you could find your bank account and all of the other things you’ve worked hard to build up, wiped out by a lawsuit resulting from you not having enough insurance.
So while you may save some money today by buying minimum limits insurance, I would advise you to consider spending a little more to protect yourself in the future better.