Perhaps, you’ve heard conflicting advice. Some people say to always go with the higher deductible and minimum coverage limits to pay less for car insurance. Other times, you might have heard to protect your assets and raise your limits. Which is it? Let’s start from the ground up.
First, What Are Limits?
Car insurance limits are simply the maximum amount that your carrier will pay for damages when you submit a claim. It’s essentially your coverage limit. There are many factors that may influence your decision to lower or raise your liability limits, depending on your personal driving situation.
Here are factors to consider:
- State Requirements
One major base factor involves state requirements. Each state has its own minimum requirements for auto insurance. Depending on your location, you should know the necessary, required amounts, which are typically for liability car insurance. These limits are adjustable as long as the state requirements are met.
- Financial Situation
What’s your financial picture? That’s something you should consider before changing up your limits. Depending on your finances, there are different options that may work out best for you. For example, if you have a high net worth, it may be in your best interest to raise your car insurance limits. If you keep your limits at the minimum level and are ever involved in a damaging collision, the other driver may go after your assets once your insurance limits are surpassed. In such a situation, you’d be much better off with higher liability coverage so that you can protect your assets. However, if you aren’t concerned about protecting such property, you could keep your liability limit lower and pay a more affordable rate.
- Driving History and Behavior
Do you have a history of accidents or are you a high-risk driver? If you are, you may find that you want higher coverage limits in case of accidents. That way you’ll be insured for damages up to a larger amount, after paying your deductible.
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Pick and Choose:
If you’re altering your car insurance limits, remember that it isn’t all or nothing. Perhaps, certain limits are worth increasing while others are best kept at the lower level. As your situation changes, adjust them accordingly.
The coverage options that typically can be adjusted include:
- Collision and comprehensive – covers vehicle repairs that result from an accident, damage nonrelated to accidents, such as fire, weather phenomena, theft, or vandalism
- Bodily injury liabiity – covers damages if others are hurt
- Property damage liability – covers damage to any that property that your vehicle causes
- Uninsured/underinsured motorist – covers your injuries if you’re in an accident with an uninsured driver or one who does not have enough liability coverage. In some cases it will also cover damage to your car.
- Personal injury protection – sometimes required for no-fault insurance states, covers medical expenses for the driver
Understand the Numbers:
You may see your coverage options and commonly see numbers listed like this: 30/60/15. What do they mean? Each number represents thousands, indicating that the insurance company will pay up to $30,000 bodily injury per individual involved in an accident, $60,000 per accident, and up to $15,000 for property damage. Each of the numbers represents a limit that can be adjusted higher if you decide it’s necessary.
Car insurance limits depend on many different considerations. Consider the risk before adjusting your limits and weigh out whether any changes will better help keep you, and your vehicle, protected.