When it comes to shopping for car insurance, choosing the right coverage limits can be a bit confusing. We’re going to help you simplify the process.
Car Insurance Coverage Overview
In this article we’re going to focus on your liability limits. These are simply the coverage limits available to you for property damage and injuries. Depending on your state, you may have some different options. We’re going to discuss the most common car insurance coverages.
Bodily Injury Liability
This coverage is to pay for injuries to someone else in a car accident in which you are at-fault. You can choose split limits or combined single limit.
EXAMPLE:
Split Limits: $100,000 per person / $300,000 per accident
Combined Single Limit: $300,000
As you can see in the split limits, you’ll have a $100,000 limit per person for injuries not to exceed a total of $300,000.
For Combined Single Limit, you would have a total coverage of $300,000 without any limit per person.
Our Recommendation
Split Limits: $250,000 per person / $500,000 per accident
OR
Combined Single Limit: $500,000
Why?
- Severe injury claims can exceed state minimum limits quickly.
- Higher limits help protect your income, savings, and future assets.
- Medical costs and legal expenses can add up fast after a serious accident.
- The price difference for better protection is often smaller than many drivers expect.
Property Damage Liability
This protects you for damage to other people’s property when you are in an at-fault accident. That property can include other vehicles, road signs, fences, or even a building.
If you have split limits, as we just discussed, you’ll see a separate limit for Property Damage Liability. If you have elected Combined Single Limit, you will not see a separate coverage amount because it is all part of your one single limit.
EXAMPLE:
Split Limits: $100,000 per accident
Combined Single Limit: $300,000 (total coverage you have for both Bodily Injury and Property Damage Liability)
Our Recommendation
Split Limits: $250,000 Property Damage Liability
OR
Combined Single Limit: $500,000
Why?
- Vehicle repair and replacement costs are much higher than they used to be.
- Low property damage limits can be exhausted quickly in a multi-vehicle accident.
- Higher limits can help protect you if you damage a building, sign, fence, or other property.
Uninsured Motorist Bodily Injury
Covers your injuries if the other driver doesn’t have car insurance. Not required in all states.
Our Recommendation
$250,000 per person / $500,000 per accident
Why?
1 in 8 drivers are uninsured according to the Insurance Information Institute. That should be reason enough.
Underinsured Motorist Bodily Injury
Covers your injuries if the other driver’s policy limits aren’t enough to cover your medical costs.
Our Recommendation
$250,000 per person / $500,000 per accident
Why?
- Many drivers carry only minimum liability limits.
- Medical bills can exceed another driver’s coverage much faster than people expect.
Medical Payments or Personal Injury Protection
Depending on the state you live in, you may have the option of purchasing Medical Payments. This helps pay for injuries to you and your passengers if you’re at fault. Remember, your liability coverage only pays for people in the other vehicle, not your own.
Personal Injury Protection (PIP) pays no matter who is at-fault. This coverage is only available in some states and may be optional or required.
Our Recommendation
Depends on your health insurance and state you live in.
Why?
Even if you have health insurance, you may still elect to purchase Medical Payments to help cover your deductible and other out-of-pocket costs.
Conclusion
Just like anything else in life, you get what you pay for. If you’re saving a lot of money and have a cheap policy, it’s likely your car insurance coverage could fall short come claim time.
Have a conversation with your agent and find the risk tolerance you’re comfortable with. The most important thing is understanding what coverage you actually have so there are no surprises later.
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