You can always find a lower price, but at what cost?

Liability limits are the most
important coverage
in your policy...yet
​they are often not discussed. 
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We have all seen the overabundance of insurance advertising that come at us from every direction these days. Name your own price, accident forgiveness, new car replacement, key replacement, pet injury coverage etc. This focus on a laundry list of  "extras" could be considered an attempt by insurers to steer your attention away from the importance of purchasing higher auto limits of Liability. 

Why do they do this? What would cost insurers more, replacing your auto with one a model year newer, or covering your $500,000 liability claim. Insurers can hold down what they potentially need to pay out in the event of a liability loss by shifting your attention towards policy price and included extra coverage's.  The advertising does not educate consumers that liability from an accident can be in the hundreds of thousands, and sometimes even exceed a million of dollars. Well above most insureds policy limits. 

If the amount you are responsible for from a liability loss is greater than your limits of liability, you are personally responsible for the balance. Courts may order you to liquidate your assets (Sell your property, cash in your retirement, sell your business) and/or have future earnings garnished to make restitution.

A good rule of thumb is to maintain limits of personal liability that are greater than your total assets plus any possible future earning. This will better protect you in the event of a momentary lack of attention or judgement that could result in a costly liability claim. 

Despite laws that compel the purchase of auto insurance, many people choose to drive without it. According to the Insurance Research Council (IRC), nearly 13% of motorists, or about one in eight drivers, were uninsured in 2014.

Consideration should also given to how much you would need to be compensate if an un- or under-insured driver injures you or your family members. Without proper policy limits, you could have massive medical bills and/or experiences associated with the loss income with no compensation possible from the at-fault party.  Purchasing higher limits of un- or under-coverage would better protect your family for a loss like this.

You may also want to consider adding a Personal Umbrella Policy (PUP) to your insurance portfolio. A PUP is an additional layer of liability available with limits in one million intervals and provides excess coverage above your other personal policies. Pricing for a PUP is based on the risk factors in your household (Number of autos, age of drivers, prior loss/driving history. etc...) and normally range from $150 to $350 per year. You can also endorse the PUP to include additional un- and under-insurance coverage's. 

Sure, all the extras that we can now add to your personal auto policy are nice. Just remember to review the limits of liability offered at a competitive price. After all, does it really matter your insurance carrier replaced your car with one one year newer if you have to sell it because your liability limits were to low?  

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