By: Advocate Brokerage
By Rosalyn Binday
Are you unfortunately familiar with the term “policy limits?”
If you’ve ever had someone slip and fall on your front steps or been at-fault in an auto accident, you just might be.
Policy limits are the maximum that your insurance will pay for a specific claim. For example, if you buy only minimum auto coverage in New York State, your policy would at most pay out $25,000 for bodily injury claims to an individual hurt in an accident that was your fault. The maximum it would pay for all bodily injury claims in a single accident would be $50,000. Bodily injury is a liability coverage.
For property damage liability to other cars in the accident, or if you struck a gate or fence, the most this low-ball policy would cover would be $10,000. You could and likely would be sued for the rest.
Just imagine the cost of a fender-bender to someone’s brand new Lexus or Lincoln – $10,000 could be a drop in the bucket for property damage. And if the accident causes injuries to the occupants of another car, that $50,000 might sadly be a small fraction of the medical bills.
In Connecticut, the limits are lower for the minimum auto policy: $20,000 max per injured person; $40,000 total bodily injury per accident; and $10,000 total property damage.
New Jersey has such lowball limits – $15,000 per person, $30,000 per accident and $5,000 property damage – that anyone who feels covered by such a policy is making a big mistake.
Florida enjoys the dubious honor of requiring he lowest limits in the U.S. $10,000 per person, $20,000 per accident and $10,000 property damage.
Because the largest area for a lawsuit tends to be related to auto claims, anyone can be sued regardless of their assets, we recommend that a personal umbrella be added to your insurance portfolio for coverage that takes over where your primary policies leave off. Very affordable umbrella policies offered by our top-rank insurers can provide peace of mind and protection for your family if something untoward should happen. For a personal umbrella to properly “fit” over the auto you must carry certain minimum underlying liability limits …usually $250,000/$500,000/$100,000, or even better, $500,000 combined single limit liability.
States intentionally set auto policy limits low so those with modest incomes can afford at least some insurance, as required by law, in order to drive. On the homeowner’s side, it is the banks that require much more realistic property limits before they’ll give you a mortgage. However, they have little or no interest in the liability component of your home insurance. We suggest no less than $300,000, as the cost is very low.
But when it comes to the liability coverage you really need, only you, in partnership with your trusted advisor at Advocate Brokerage, can make the determination. Give us a call, and together we will find the right insurance, and the right price, for you.
State-by-State Minimum Requirements