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What is auto liability insurance and how much should I buy?

By April 28, 2017June 8th, 2020Insurance

Auto liability insurance is one of the most important coverages you purchase!

It pays for the damage you may cause to another person or persons and/or the property you damage (another car, a wall, a building, etc.)as a result of an automobile accident.

It basically protects you from damages or lawsuits, but only to the extent of the limits you purchase.


You may see it presented as BI/PD. The BI means ”Bodily Injury” and the PD means “Property Damage”. The bodily injury and property damage limit means the maximum amount your insurance company will pay out for the damage you caused to another person or property. The Bodily Injury portion is split into two parts per person and per accident. You may see it displayed as;






The first dollar amount means that is the maximum amount your insurance policy will cover for a single person that is injured in an accident you cause. The second dollar amount means that is the maximum amount your insurance policy will cover per accident regardless of how many people are injured in the accident.

The Property Damage limits may be displayed as;






This means the limit you choose is the maximum amount the insurance company will pay for damage to another person’s property that you cause.

What is full coverage then? There is no such thing, as the amount of damage or injuries you cause may exceed the limit you purchased or that are available from that insurance company.


What limits should you choose? This depends on a couple factors.

  1. How much assets you have to protect.
  2. How well you want to be protected
  3. How much you can afford.


Think of choosing your limits as building a wall between everything you own (Your home, cars, savings, future wages) and the other party or their attorneys (The Wolves)

The lower the limit, the lower the wall. Making it easier for them to get to your hard earned assets. (Draw a picture showing a house, cars, money, etc on one side and the wall in the middle showing one layer of bricks and as the limits increase the level of bricks increase. On the other side of the wall a picture of a big bad wolf, representing the other parties attorney) The higher the limit the higher the wall is, making it more difficult for them to get to your assets. (Show the wall growing representing the higher limits the person chooses).

Think about this. How many cars can you purchase today that cost $5,000? $10,000? $25,000? $50,000?

So what would happen if you rear ended a brand new luxury vehicle, severely damaging the car and only carried $5,000 in Property Damage coverage? The insurance company would pay out $5,000 maximum and anything over that amount you would be responsible for! The difference in cost for the higher limits may have only been a few dollars a month vs. a huge debt for damages you caused if you chose low property damage limits.

Now think what would happen if you seriously injured a family and they had to spend a few days in the hospital and sustained permanent injuries. Would $15,000 per person and $30,000 per accident be sufficient to cover the hospital and medical bills for each person you injured? At today’s cost, probably not. So, once the insurance company pays out $15,000 on any one person and/or $30,000 for all parties combined you would be responsible for the remaining amount owed. This could be tens or even hundreds of thousands of dollars. you could be personally responsible for if you were found to be negligent in the accident. The difference in cost between $15,000/$30,000 and $100,000/$300,000 may only be only a few dollars more per month.

Speak to your agent about the different options available, the cost, and the level of assets you may need to protect, such as a home, savings, future earnings etc. to determine the best options available.

Don’t make the mistake of focusing on your comprehensive and collision deductibles, paying more to carry a lower deductible. We recommend carrying a higher collision deductible and use the savings to purchase higher liability limits. Remember while a $1,000 deductible may hurt to pay out, underinsuring on your auto liability and having to pay out hundreds of thousands of dollars, even millions, if you were to seriously injure another person would devastate you and your family financially.

If you have questions about your coverage or would like quotes from multiple carriers contact our office at 877-428-8778

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