Automobile Insurance – Legal Minimums

Bodily Injury Liability and Property Damage Liability have legal minimums in most states, and more is often recommended. If you are financing the car, your lender will probably require collision and comprehensive.

Liability insurance covers you if you are sued and is usually expressed as a series of 3 numbers such as 20/40/10. The first number refers to liability limits for bodily injury for any one person, the second to limits for all persons injured, and the third refers to property damage liability limits. So for example, 20/40/10 means up to $20,000 is covered for one person injured in an accident, 40,000 is covered for all persons , and up to $10,000 coverage for property damage.

20/40/10 is the minimum in my State of Connecticut and may seem like a lot of money, but keep in mind that $20,000 might just barely cover a broken leg and $10,000 property damage won’t go very far if you broadside a BMW. If you cause a serious accident, minimum insurance may not cover you adequately, and if you own your home or have other assets, you should consider more liability insurance because in most states, drivers are allowed to sue other drivers who injure them in car accidents.

Your actual amount will depend on your financial situation.  No one likes to pay the added premiums of higher limits, but most of us should purchase additional coverage.  Elsewhere in this site I recommend a minimum of 100/300/50.  That’s $100,000 per person, $300,000 for all persons per accident, and $50,000 for property damage.  It sounds like a lot but really isn’t.  Heavens forbid that you seriously injure someone.  A hundred thousand dollars doesn’t go very far.  And $50,000 isn’t much more than a fancy SUV, and that’s assuming that you hit only one!