Will Your Insurance Really Cover You in a Car Accident? Understanding Auto Insurance Liability Limits

Do you have auto insurance? If you were to get into a car accident, would your insurance cover everything? Most people think the answer is automatically "yes," but it's actually a bit more complicated. Not all auto insurance policies are the same, and the coverage you have might not be enough. That's where understanding your liability limits comes in.

What Are Auto Insurance Liability Limits?

Liability limits are like the "maximum" your insurance company will pay if you cause an accident and are responsible for damage or injuries. These limits are split into two parts:

  1. Bodily Injury Liability (BI) – This helps cover medical expenses if you hurt someone in an accident. It can also cover things like lost wages and legal fees. For example, if your BI limit is $30,000/$60,000, it means your insurance will pay up to $30,000 for each person injured and up to $60,000 total for everyone hurt in the accident.

  2. Property Damage Liability (PD) – This covers repairs or replacement of the other person’s car or any property you might damage in the accident, like a mailbox or fence. So if you have a $25,000 limit, your insurance will pay up to that amount for property damage.

Why Are Higher Liability Limits Important?

Many people stick with the state-required minimum coverage, thinking it's enough. But the truth is, these minimums usually don’t cover all the costs of an accident. Here's why it’s important to have higher limits:

  • Medical bills can be huge. A trip to the emergency room or surgery can easily cost more than the minimum amount your insurance covers, leaving you responsible for the rest.

  • Cars and property are expensive to replace. If you damage a high-end car or cause significant property damage, your insurance might not cover it all. For example, if the other car costs $40,000 but your PD limit is only $25,000, you're responsible for the extra $15,000.

  • You could get sued. If your insurance doesn’t cover everything, the other driver could take you to court. If they win, a judge could order a judgment against you, which means they can take money from your paychecks, tax refunds, or even winnings if you ever get lucky and win the lottery!

How Much Coverage Should You Have?

Even though each state sets minimum requirements for liability limits, it’s usually smart to go higher. Many experts recommend at least $100,000/$300,000 for bodily injury and $100,000 for property damage. If you have a home, savings, or other assets, you might want to consider even higher limits or get an umbrella policy, which offers extra protection.

Protect Your Wallet—and Your Future

Having the right amount of insurance is not just about meeting legal requirements—it’s about protecting yourself from financial headaches down the road. Accidents happen, and the last thing you want is to end up owing thousands of dollars out of pocket. Review your coverage and make sure your limits are enough to keep you fully protected.

If you're not sure about your current limits or want to explore your options, we’re here to help! At Guidepoint Insurance, we specialize in making insurance easy to understand and making sure you're covered where it counts. Call us today for a personalized quote!