In an instant, you could be involved in an accident that would impact the rest of your life. The difficult part is imagining how much financial destruction this could potentially cause you if you don’t have adequate insurance in place. That’s why it’s vital you have a $2 million liability limit on your policy.
What is the ‘Liability Limit’ On Your Policy?
Within your personal insurance policy, the liability portion provides protection if you are involved in an at-fault automobile accident or should a loss occur where you are sued for bodily injury, fatality or property damage (that you are legally responsible for).
This coverage provides the cost of a defense and pays a post-judgment settlement up to the limit of liability you have purchased on your policy.
Understanding the Implications
Understandably, when we haven’t experienced something it makes it difficult to comprehend. As your trusted broker, we believe it’s our duty to provide you with the information you require to make educated decisions when it comes to your auto and property insurance.
That is why it’s imperative you have a $2 million liability limit or greater on your policy. On your next renewal, you may notice your liability limit increased to $2 million.
We recognize the implications of not being adequately insured and are strongly recommending our clients carry a minimum of a $2 million liability limit on their auto and property insurance.
A Great Example of Why a Higher Liability Limit Is Important
As we mentioned before, you can and should anticipate an increased cost of insurance this year. You may ask, “What if I haven’t had a claim,” unfortunately, the cost of your insurance will likely still increase.
It’s important to mention that Insurance Companies are being more selective and strict when it comes to rule enforcement (i.e. non-payment could result in immediate cancellation). It is imperative you understand the consequences of missing a payment because this could have serious repercussions.
WHEN will rates go back down?
Here is a scenario to help you understand the importance of increasing your liability limit to $2 Million or higher on your personal insurance policies.
Scenario >> You are driving and hit a cyclist, causing him to break both of his legs. At this time you only have a liability limit of $1 million on your auto policy. In a lawsuit against you, the courts award the cyclist a judgement of $1.8 million. Taking all costs into account, your insurance carrier takes on the responsibility of $1 million (as per the policy limit). That leaves a remaining $800,000 that you are personally responsible for. If this were to happen, would you have $800,000 to personally pay out?